Level 3 accepts tenders for $123.85 million of 6% convertibles due 2009

By Jennifer Chiou

New York, Dec. 31 - Level 3 Communications, Inc. said it accepted tenders from holders of $123.85 million of its $305.14 million outstanding 6% convertible subordinated notes due 2009.

At noon ET on Dec. 23, $129,421,000 principal amount of the 6% convertibles due 2009 had been tendered. The offer began on Nov. 17.

For each $1,000 principal amount, the company paid $920 for the 6% convertibles due 2009 plus accrued interest.

On Dec. 23, the company waived the minimum tender condition for the notes and extended the expiration to midnight ET on Dec. 30 from Dec. 22.

Also on that date, the company completed the tender offers for its $354.54 million outstanding 2.875% convertible senior notes due 2010 and $481.67 million outstanding 6% convertible subordinated notes due 2010. As already reported, investors had tendered $162,718,000 principal amount of the 2.875% convertibles and $173,571,000 principal amount of the 6% convertibles due 2010.

The company paid $620 per $1,000 principal amount of the 2.875% convertibles and $700 per $1,000 principal amount of the 6% convertibles due 2010 plus accrued interest to the payment date of Dec. 24.

Level 3 said on Dec. 16 that it lowered each offer's minimum tender condition to $162 million, or 45.7%, for the 2.875% convertibles, $173 million, or 35.9%, for the 6% convertibles due 2010 and $135 million, or 44.2% for the 6% convertibles due 2009. Each offer originally had a 50% minimum tender condition.

The offers began on Nov. 17. At Dec. 15, holders had tendered $163.76 million of the 2.875% convertibles, $174.42 million of the 6% convertibles due 2010 and $137.46 million of the 6% convertibles due 2009.

For each $1,000 principal amount, the company offered $620 for the 2.875% convertibles, $700 for the 6% convertibles due 2010 and $920 for the 6% convertibles due 2009. Holders also received accrued interest up to but excluding the payment date.

The offer for the 2.875% convertibles was conditioned on the acceptance by the company of its 6% convertibles due 2010 and vice versa. The offer for the 6% convertibles due 2009 was conditioned on the acceptance by the company of both its 2.875% convertibles and 6% convertibles due 2010.

Level 3 previously waived the financing condition for the tender offers that required it to sell at least $373 million of new 15% convertible senior notes due 2013.

The company waived the condition on Dec. 8 after investors who agreed to purchase $360.12 million of Level 3's 15% convertibles in a negotiated offering deposited the purchase price into escrow.

Proceeds from the offering and cash on hand were used to fund the tender offer.

The release of the escrowed funds was conditioned on, among other things, the minimum tender conditions being met in the offers for the 2.875% convertibles and 6% convertibles due 2010.

Citi (800 558-3745 or 212 723-6106) and Merrill Lynch & Co. (888 654-8637 or 212 449-4914) were the dealer managers, and Global Bondholder Services Corp. (212 430-3774 or 866 873-6300) was the information agent.

Level 3 a Broomfield, Colo.-based provider of fiber-based communications services.

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