Fitch Rates Level 3 Financing's $1B 144A Senior Notes 'B/RR1'.CHICAGO -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has assigned a 'B/RR1' rating to Level 3 Financing, Inc.'s $1 billion offering of senior unsecured notes issued in a private offering in accordance with Securities and Exchange Commission Rule 144A Rule 144A A Securities & Exchange Commission rule modifying a two-year holding period requirement on privately placed securities to permit qualified institutional buyers to trade these positions among themselves. . The offering consists of the following: --$300 million floating-rate senior notes due 2015; --$700 million 8.75% senior notes due 2017. Level 3 Financing, Inc. is a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Level 3 Communications
Level 3 Communications NASDAQ: LVLT is a communications and information services company headquartered in Broomfield, Colorado, USA. , Inc. (Level 3). Fitch has an Issuer Default Rating (IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) of 'CCC' for both Level 3 and level 3 Financing, Inc. The Rating Outlook is Positive. Proceeds from the offering are expected to be utilized in part to fund the redemption of level 3's 12.875% Senior Discount Notes due 2010 (approximately $488 million outstanding) as well as for other corporate purposes including opportunistically redeeming debt at Level 3 Financing, Inc. or Level 3. The offering reflects the company's ongoing strategy to lower interest costs and effectively manage its maturity profile. In line with this strategy, Level 3 financing, Inc. intends to refinance its $730 million senior secured credit facility. If the company's efforts are successful, Fitch expects that the new credit facility will provide Level 3 with additional financial flexibility, lower interest costs and extend the final maturity into 2014. Fitch's Positive Rating outlook reflects Fitch's belief that the company's recent acquisitions position the company to generate sustainable revenue and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become growth that will drive further improvement in level 3's credit profile. Provided the successful integration of the recent acquisitions, Fitch expects Level 3 to generate positive free cash flow in 2008. Fitch believes that the timing of an upgrade to Level 3's IDR will be linked to the company's ability to improve free cash flow, reduce leverage, generate organic revenue growth and expand margins while maintaining liquidity and financial flexibility. Overall, Fitch's ratings for Level 3 continue to reflect the company's high leverage, negative free cash flow and the execution risks surrounding the integration of the various acquisitions completed during 2006 and the first part of 2007. For the year ended 2006 Level 3's leverage metric was 10.8 times (x) an improvement from 12.9x as of year-end 2005. Reflecting the positive operating momentum and the company's financial strategies, free cash flow, measured as cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses less capital expenditures improved to negative $171 million during 2006. Fitch's Recovery Ratings (RR) are a relative indicator of creditor recovery prospects on a given obligation within an issuers' capital structure in the event of a default. A broad overview of Fitch's RR methodology as it relates to specific sectors can be found at www.fitchratings.com/recovery. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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