Level 3 to Acquire Broadwing Corporation
17 Octubre 2006 - 8:00AM
PR Newswire (US)
Combination Will Further Leverage Level 3's Nationwide Network
BROOMFIELD, Colo., Oct. 17 /PRNewswire-FirstCall/ -- Level 3
Communications, Inc. (NASDAQ:LVLT) today announced that it has
signed a definitive agreement to acquire Broadwing Corporation
(NASDAQ:BWNG), a publicly held provider of optical network
communications services. Under the terms of the agreement, Level 3
will pay $8.18 of cash plus 1.3411 shares of Level 3 common stock
for each share of Broadwing common stock outstanding at closing. In
total, Level 3 currently expects to pay approximately $744 million
of cash and issue approximately 122 million shares. Broadwing,
based in Austin, Texas, delivers data, voice and media solutions to
enterprises and service providers over its 19,000 mile intercity
fiber network. Approximately half of Broadwing's revenue comes from
the wholesale market, with business customers comprising the
remaining revenue. "The acquisition of Broadwing is consistent with
both the Level 3 wholesale market strategy as well as our more
recent entry into the enterprise market," said James Q. Crowe,
chief executive officer of Level 3. "We believe the combination of
Level 3 and Broadwing will create value for our investors through
the elimination of duplicative network and operating costs, the
addition of a solid revenue base, and a further strengthening of
our financial position. "Broadwing has made great strides with
national enterprise customers as a result of their strong product
portfolio and national sales teams. This creates an exciting
opportunity for us to leverage both of these capabilities to
accelerate the growth of Level 3's Business Markets Group." "We are
confident in our ability to successfully integrate Broadwing," said
Kevin O'Hara, president and chief operating officer of Level 3. "We
have completed the majority of integration efforts from our WilTel
acquisition under budget and ahead of schedule. The integration
activities for our more recent acquisitions are also on plan."
"Bringing together the resources and talents of Broadwing and Level
3 is an exciting opportunity for our company, allowing us to
capitalize on the strengths of both companies and on advances in
technology," said Steve Courter, chief executive officer of
Broadwing Corporation. "The combination of our two operations will
create a powerful company in the global telecommunications industry
with strong growth potential." "During 2006, Broadwing has grown
revenue and improved its margin profile," said Sunit Patel, chief
financial officer of Level 3. "Broadwing has had success with
expanding its enterprise customer base and service offerings as
well as its transport business. We expect the combined operations
to directly benefit from these efforts. "Broadwing is expected to
contribute positive Adjusted OIBDA in 2007, and even though we
expect integration efforts to extend into 2008, we expect Broadwing
will generate approximately $200-$250 million of Consolidated
Adjusted OIBDA in 2008. "Including the benefit of synergies and the
cost of integration including capital expenditures, this
transaction is free cash flow positive in 2008 and should
contribute over $200 million of free cash flow in 2009. Total
integration costs are expected to be approximately $110-$130
million. "We expect the transaction to further improve Level 3's
financial position and reduce leverage given its expected positive
Adjusted OIBDA contribution and Broadwing's approximately $150
million of net cash as of June 30, 2006." As of June 30, 2006,
Level 3 had approximately $1.4 billion of cash and marketable
securities on hand as adjusted for the acquisitions of TelCove and
Looking Glass, the sale of Software Spectrum and the redemption of
its outstanding 9.125% Senior Notes due 2008 and 10.50% Senior
Discount Notes due 2008. Closing is subject to customary
conditions, including receipt of applicable state and federal
regulatory approvals, and is also subject to the approval of the
stockholders of Broadwing. Closing is expected to occur in the
first quarter of 2007. Level 3 will hold an investor and media
conference call today to discuss the announcement at 10 a.m. EDT.
To join the call, please dial (612) 332-1025. A live broadcast of
the call can also be heard on Level 3's Web site at
http://www.level3.com/. An audio replay of the call will be
available within 24 hours after the call through the Web site or by
dialing (320) 365-3844 - Access code 845296. Level 3 was advised on
the transaction by Evercore Partners, JPMorgan and Merrill Lynch
& Co. Level 3 received legal representation from Willkie Farr
& Gallagher LLP. About Level 3 Communications Level 3
Communications, Inc (NASDAQ:LVLT), 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.
These services provide building blocks that enable Level 3's
customers to meet their growing demands for advanced communications
solutions. The company's Web address is http://www.level3.com/.
"Level 3 Communications," "Level 3" and the Level 3 Communications
logo are registered service marks of Level 3 Communications, Inc.
in the United States and/or other countries. Any other product and
company names herein may be trademarks of their respective owners.
Level 3 services are provided by wholly owned subsidiaries of Level
3 Communications, Inc. Forward-Looking Statement This press release
contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, but are not limited to, (i)
statements about the benefits of the acquisition of Broadwing by
Level 3, including financial and operating results and synergy
benefits that may be realized from the acquisition; Level 3's and
Broadwing's plans, objectives, expectations and intentions and
other statements contained in this presentation that are not
historical facts; and (ii) other statements identified by words
such as "expects," "anticipates," "intends," "plans," "believes,"
"seeks," "estimates" or words of similar meaning. These
forward-looking statements are based upon management's current
beliefs or expectations and are inherently subject to significant
business, economic and competitive uncertainties and contingencies
and third-party approvals, many of which are beyond our control.
The following factors, among others, could cause actual results to
differ materially from those described in the forward-looking
statements: (1) whether the stockholders of Broadwing approve the
proposed transaction; (2) the satisfaction of the other conditions
specified in the merger agreement, including without limitation the
receipt of required governmental approvals of the proposed
transaction; (3) the ability to successfully combine the businesses
of Level 3 and Broadwing; (4) the realization of revenue and cost
synergy benefits from the proposed transaction; and (5) operating
costs, customer loss and business disruption following the merger,
including adverse effects on relationships with employees. Other
important factors that may affect Level 3's and the combined
business' results of operations and financial condition include,
but are not limited to: increasing the volume of traffic on Level
3's network; developing new products and services that meet
customer demands and generate acceptable margins; successfully
completing commercial testing of new technology and information
systems to support new products and services, including voice
transmission services; stabilizing or reducing the rate of price
compression on certain of our communications services; integrating
strategic acquisitions including the acquisition of Broadwing;
attracting and retaining qualified management and other personnel;
and the ability to meet all of the terms and conditions of our debt
obligations. Level 3's Annual Report on Form 10-K, subsequent
Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K
and other Securities and Exchange Commission filings discuss the
foregoing risks as well as other important risk factors that could
contribute to such differences or otherwise affect our business,
results of operations and financial condition. The forward-looking
statements in this release and the related conference call for
analysts and investors speak only as of the date they are made.
Level 3 and Broadwing do not undertake any obligation to update any
forward-looking statement to reflect circumstances or events that
occur after the date such forward-looking statement is made. This
press release shall not constitute an offer of any securities for
sale. The proposed transaction will be submitted to Broadwing's
stockholders for their consideration. Level 3 and Broadwing will
file a registration statement, a proxy statement/prospectus and
other relevant documents concerning the proposed transaction with
the SEC. Stockholders of Broadwing are urged to read the
registration statement and the proxy statement/prospectus and any
other relevant documents filed with the SEC when they become
available, as well as any amendments or supplements to those
documents, because they will contain important information.
Stockholders of Level 3 can obtain more information about the
proposed transaction by reviewing the Form 8-K to be filed by Level
3 in connection with the announcement of the transaction, and any
other relevant documents filed with the SEC when they become
available. You will be able to obtain a free copy of the proxy
statement/prospectus, as well as other filings containing
information about Level 3 and Broadwing, at the SEC's Web site
(http://www.sec.gov/). Copies of the proxy statement/prospectus and
the SEC filings that will be incorporated by reference in the proxy
statement/prospectus can be obtained, without charge, by directing
a request to Level 3, Investor Relations, 1025 Eldorado Blvd.,
Broomfield, CO 80021, 720-888-2500 or to Broadwing, Investor
Relations, 1122 Capital of Texas Highway South Austin, TX
78746-6426, (866) 426-7847. Level 3, Broadwing and their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies from the stockholders of Broadwing
in connection with the proposed transaction. Information about the
directors and executive officers of Level 3 is set forth in the
proxy statement on Schedule 14A, dated April 6, 2006, as
supplemented, for Level 3's 2006 annual meeting of stockholders.
Information about directors and executive officers of Broadwing and
their ownership of Broadwing common stock is set forth in the proxy
statement on Schedule 14A, filed with the SEC on March 24, 2006,
for Broadwing's 2006 annual meeting of stockholders. Additional
information regarding participants in the proxy solicitation may be
obtained by reading the proxy statement/prospectus regarding the
proposed transaction when it becomes available.
http://www.newscom.com/cgi-bin/prnh/19990721/LVLTLOGODATASOURCE:
Level 3 Communications, Inc. CONTACT: Media: Josh Howell,
+1-720-888-2517, or Chris Hardman, +1-720-888-2292, or Investors:
Robin Grey, +1-720-888-2518, or Valerie Finberg, +1-720-888-2501,
all of Level 3 Communications, Inc. Web site:
http://www.level3.com/
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