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Level 3 Announces Acquisition of Viatel Transatlantic Network Assets

    Transaction Approved By Viatel Bankruptcy Judge

Level 3 Communications, Inc. (Nasdaq:LVLT) announced today that it has acquired the transatlantic network of Viatel, Inc. A federal judge overseeing Viatel's Chapter 11 bankruptcy proceedings approved Level 3's purchase on Tuesday, and the transaction was closed on Wednesday.

Specifically, Level 3 has purchased from Viatel two fibers on the "Yellow" submarine cable connecting London and New York. This is the same fiber pair that Level 3 sold to Viatel in April 2000. Level 3 now owns and controls 50 percent of the fibers on the Yellow cable.

Under the terms of the transaction, Level 3 retains all cash payments already made by Viatel under the April 2000 contract, including $94 million paid to Level 3 at the end of last year. In return for the Yellow fiber pair, Level 3 has released Viatel from debts registered with the bankruptcy court totaling approximately $9 million. Viatel has also transferred 20 gigabits of capacity on the separate transatlantic cable known as "AC-1" to Level 3. Additional terms of the transaction are contained in the summary below.

"We believe this transaction will create value for us, and we continue to look for opportunities as they develop in the current market environment," said Kevin O'Hara, Level 3's president and chief operating officer.

O'Hara said that Level 3 continues to take a strategic approach in managing its inventory of undersea network assets. "With this transaction, we have effectively cut in half our cost basis for transatlantic capacity," O'Hara said. "Our objective is to ensure we have the appropriate amount of low-cost bandwidth available to connect our terrestrial networks as we continue to expand our international customer base."

Transaction summary The key provisions of the Level 3-Viatel transaction approved by the judge overseeing Viatel's bankruptcy include:

  • Level 3 retains the cash payments already received from Viatel under Level 3's original sale of transatlantic fiber announced in April 2000, including $94 million received by Level 3 at the end of last year.
  • Viatel has transferred ownership of its fiber pair on the Yellow cable back to Level 3.
  • Level 3 now owns 50 percent of the fiber on that cable.
  • Viatel has transferred backhaul fiber and 20 gigabits of capacity on the AC-1 transatlantic cable to Level 3. Those assets were originally sold to Viatel under the April 2000 contract.
  • Level 3 has released Viatel from debts it registered with the bankruptcy court totaling approximately $9 million. Level 3 has also paid Viatel $100,000 in cash.
  • Level 3 will provide Viatel with two unprotected 2.5-gigabit wavelengths on the Yellow cable. Viatel will pay $500,000 in cash to Level 3 to cover one year's operation and maintenance charges on the wavelengths and other costs.

About Level 3 Communications
Level 3 Communications, Inc. (NASDAQ: LVLT), an international communications company, operates one of the largest Internet backbones in the world, connecting 180 markets in 18 countries. The company serves a broad range of wholesale, enterprise and content customers with a comprehensive suite of services including: Internet Protocol (IP) services, broadband transport and infrastructure services, colocation services, voice and voice over IP services, content delivery and media distribution services. These services provide the building blocks to enable Level 3’s customers to meet their growing demands for advanced communications solutions. The company’s Web address is www.Level3.com.

"Level 3 Communications,” "Level 3," the red 3D brackets and the Level 3 Communications logo are registered service marks of Level 3 Communications, LLC in the United States and/or other countries.  Level 3 services are provided by wholly owned subsidiaries of Level 3 Communications, Inc.  Any other service, product or company names recited herein may be trademarks or service marks of their respective owners.

Forward-Looking Statement
Some of the statements that we make in this press release are forward looking in nature. These statements are based on management’s current expectations or beliefs. These forward looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside our control, which could cause actual events to differ materially from those expressed or implied by the statements. The most important factors that could prevent us from achieving our stated goals include, but are not limited to our ability to: successfully integrate acquisitions; increase the volume of traffic on our network; defend our intellectual property and proprietary rights; develop new products and services that meet customer demands and generate acceptable margins; successfully complete commercial testing of new technology and information systems to support new products and services; attract and retain qualified management and other personnel; and meet all of the terms and conditions of our debt obligations. Additional information concerning these and other important factors can be found within Level 3’s filings with the Securities and Exchange Commission. Statements in this press release should be evaluated in light of these important factors. Level 3 is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.