Level 3 to swap new convertibles, cash for 6%, 2.875% convertibles

By Angela McDaniels

Tacoma, Wash., June 22 - Level 3 Communications, Inc. said it agreed to exchange cash and new 7% convertible senior notes due March 15, 2015 for $142,079,000 principal amount of its 6% convertible subordinated notes due 2010 and $139.82 million principal amount of 2.875% convertible senior notes due 2010.

The company will deliver $200 million principal amount of 7% convertibles, $78,208,900 in cash and accrued interest.

The new convertibles will be issued at 98% of par and will have a conversion price of $1.80 per share.

The exchange agreement was reached with an institutional investor and covers convertibles held by the investor on behalf of its client accounts, according to a company news release.

The company expects to close the exchange before the end of the second quarter.

Additionally, Level 3 said it has paid about $223 million to repurchase approximately $248 million of debt during the second quarter, including $117 million of debt due 2009, $50 million of debt due 2010, $61 million of debt due 2011 and $20 million of debt due 2012.

After the settlement of the exchange agreement, Level 3 will have about $60 million of debt due in 2009, $181 million of debt due in 2010, $505 million of debt due in 2011 and $306 million of debt due in 2012.

Level 3 provides fiber-based communications services and is based in Broomfield, Colo.

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