Posts by Topic: xo communicationsRSS feed
| January 5, 2010, 12:14 pm

Level 3 could eye more acquisitions

Broomfield-based Level 3 Communications announced today that it would buy back $550 million in 12.25 percent notes due 2013, a move one analyst says will allow the company to pursue acquisitions.

Level 3 plans to fund the debt buyback with a $640 million offering
of notes maturing in 2018.

UBS telecom analyst John Hodulik said Level 3 is probably buying back the debt because of the high interest rate and a restriction attached to the bonds that effectively makes it less attractive for the company to acquire a firm. It’s the last of Level 3′s bonds to contain that stringent covenant.

“Its redemption may pave the way for further acquisitions by
Level 3,” Hodulik wrote in a research note today. “Potential targets could include Global Crossing and XO Communications.”

Level 3 went through a spending spree in 2006, acquiring about a half-dozen companies within a year. But the company struggled to integrate the acquisitions, which may have led to the abrupt resignation of co-founder and chief operating officer Kevin O’Hara in 2008.

As you may recall, Hodulik also speculates that Denver-based Qwest could be involved in M&A activity this year. He suggests a rural phone company such as CenturyLink could have interest in Qwest.

Level 3 also announced Read more…

Most Popular