Broomfield, Colorado – (The Hosting News) – January 16, 2007 – Colocation, VoIP, and Internet backbone company, Level 3 Communications wholly owned subsidiary, Broadwing Corporation, has initiated an offer to repurchase any and all of Broadwing’s outstanding 3.125% Convertible Senior Debentures due 2026 (the “Debentures”).
The indenture governing the Debentures requires Broadwing to make the offer as a result of the merger (the “Merger”) on January 3, 2007 of (i) Level 3 Services, Inc., a wholly owned subsidiary of Level 3 (“Merger Sub”), with and into Broadwing and (ii) Broadwing with and into Level 3 Colorado, Inc., a wholly owned subsidiary of Level 3 (“Sister Subsidiary”), pursuant to an Agreement and Plan of Merger dated as of October 16, 2006, as amended by an Amendment dated as of November 21, 2006, by and among Level 3, Broadwing, Merger Sub and Sister Sub. As part of the Merger, Sister Subsidiary changed its name to Broadwing Corporation.
Broadwing is offering to purchase the Debentures for cash at a purchase price, per $1,000 principal amount, equal to 100% of the principal amount, together with $7.29 per $1,000 principal amount, representing accrued and unpaid cash interest to, but excluding, February 9, 2007. In the event that all of the outstanding Debentures are tendered in the tender offer, the aggregate purchase price required for Broadwing to purchase the tendered Debentures is estimated to be approximately $181,312,500. The tender offer for the Debentures will expire at 11:59 p.m., Eastern Time, on Friday, February 9, 2007, unless extended or earlier terminated. Holders may withdraw their tendered Debentures at any time prior to the expiration time. As required by the indenture governing the Debentures, on February 9, 2007, Broadwing will purchase all Debentures properly tendered and not withdrawn. All Debentures purchased pursuant to Broadwing’s offer will be retired upon purchase. Broadwing expects to fund the tender offer with cash on hand.
As a result of the Merger, each $1,000 principal amount of the Debentures is now convertible at the option of the holder at any time and from time to time into $492.77 in cash and 80.789 shares of Level 3 common stock, representing a conversion price equal to the consideration payable to Broadwing stockholders in the Merger of (i) $8.18 in cash per share of Broadwing, multiplied by 60.241, and (ii) 1.3411 shares of Level 3 common stock, multiplied by 60.241. Additionally, as a result of the Merger, a make-whole premium will be paid on Debentures converted prior to February 17, 2007, consisting of (i) 14.969 additional shares of Level 3 common stock and (ii) an additional $91.31 in cash per $1,000 principal amount of Debentures. On January 11, 2007, the last reported sale price of Level 3’s common stock (into which the Debentures are convertible) on the Nasdaq Global Select Market(TM) was $6.48. Fractional shares of Level 3 common stock will not be issued upon conversion. Instead, Level 3 will pay cash for any shares of fractional Level 3 common stock holders would otherwise have received.
Neither Level 3’s Board of Directors, Broadwing’s Board of Directors nor any other person makes any recommendation as to whether holders of Debentures should choose to tender their Debentures in this offer, and no one has been authorized to make such a recommendation.
Level 3 Communications, Inc., an international communications company, operates one of the largest Internet backbones in the world. Through its customers, Level 3 is the primary provider of Internet connectivity for millions of broadband subscribers. The company provides a comprehensive suite of services over its broadband fiber optic network including Internet Protocol (IP) services, broadband transport and infrastructure services, colocation services, voice services and voice over IP services. The services are designed to provide building blocks that enable Level 3’s customers to meet growing demands for advanced communications solutions.The principal components offered by Level 3’s (3)VoIP Enhanced Local service include network trunking, local telephone numbers, local number portability, the safety of E-911, operator assistance, caller ID, directory listings, and directory assistance. The service is designed to allow Level 3 customers to retain the flexibility to manage and control end-user features without the difficulties of implementing complex interconnection arrangements.
For more information about Level 3, please visit: www.level3.com.