Level 3 Offering Fall-Out (LVLT)

Posted in pre-market 
September 14th, 2010

Level 3 Communications Inc. (NASDAQ: LVLT) is getting clobbered, and much harder than what you might expect considering the history of this company.

Last night came an announcement from the company that it is offering $175 million in Convertible Senior Notes due 2016 in an underwritten offering, and it will give underwriters an option to purchase up to an additional $26,250,000 to cover over-allotments, if any.

BofA Merrill Lynch is listed as the sole book-running manager, Citi is the lead manager and Deutsche Bank Securities and Morgan Stanley are listed as co-managers.

The June 30 balance sheet showed some $443 million in cash and the company still lists over $6.223 billion in long-term debt. As far as a use of proceeds, that is for general corporate purposes including working capital, capital expenditures and the potential repurchase or redemption of its 5.25% Convertible Senior Notes due 2011 and other existing indebtedness from time to time.  Level 3′s market cap is listed as $1.93 billion before the effects of any added dilution.

Shares are being hit by more than 11% at $1.03 on more than 800,000 shares and the 52-week trading range is $0.95 to $1.77.

JON C. OGG

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