Level 3 Seeks to Refinance its $1.4B Tranche A Term Loan

Level 3 Communications, Inc. LVLT today announced that Level 3 Financing, Inc., its wholly owned subsidiary, is currently seeking to refinance its existing $1.4 billion senior secured Tranche A Term Loan under its existing senior secured credit facility with new senior secured tranches. In connection with that refinancing, Level 3 Financing is also seeking consents to amend the existing senior secured credit facility to, among other things, allow the refinancing. Level 3 Financing also has in place two interest rate swap agreements maturing in early 2014 that effectively hedge the interest rate on a portion of the Tranche A Term Loan that Level 3 Financing is seeking to refinance. As a result of the proposed refinancing, Level 3 expects that the swap agreements would become "ineffective" under generally accepted accounting principles and that Level 3 would recognize a non-cash loss effective on the closing of the Tranche A Term Loan refinancing of approximately $66 million (excluding accrued interest) in the third quarter of 2012. Going forward, Level 3 would reflect the change in fair value of the swap agreements in "Other Income" in its Consolidated Statement of Operations on a quarterly basis until their maturity in early 2014.