Purchase Price of $163 Million Includes $127 Million in Unregistered Shares of Level 3 Common Stock and $36 Million in Cash
Acquisition Expands Level 3’s Transport, IP and Voice Businesses; Extends Network Reach
BROOMFIELD, Colo., April 17, 2006 — Level 3 Communications, Inc. (Nasdaq:LVLT) today announced that it has signed a definitive agreement to acquire all of the stock of ICG Communications, Inc., a privately held Colorado-based telecommunications company. Under terms of the agreement, Level 3 will pay total consideration of $163 million, consisting of $127 million in unregistered shares of
Level 3 common stock and $36 million in cash. The number of shares to be delivered will be determined immediately prior to closing.
ICG primarily provides transport, IP and voice services to wireline and wireless carriers, Internet service providers and enterprise customers. ICG’s network has over 2,000 metro and regional fiber miles in Colorado and Ohio and includes approximately 500 points of presence. ICG serves more than 1,600 customers.
"ICG is a well-run business with a strong and growing base of customers," said Kevin O’Hara, president and chief operating officer of Level 3. "This transaction gives Level 3 the opportunity to further expand our footprint into areas where we see demand for our services, and to realize cost savings."
"Level 3 has an excellent reputation in the communications industry," said Dan Caruso, president and chief executive officer of ICG Communications. "We believe our customers and employees will be in good hands. ICG and its customers will benefit greatly from access to Level 3’s expansive network and its broad suite of communications services. We look forward to working with the Level 3 team."
"ICG standalone is expected to generate approximately $75 to $80 million of annualized revenue and approximately $10 to $15 million of annualized positive cash flow after approximately $10 million in capital expenditures," said Sunit S. Patel, chief financial officer of Level 3 Communications. "We expect annualized cash flow to improve to approximately $30 to $40 million once we have completed integration, which is expected to begin later this year."
The purchase price is subject to certain customary working capital adjustments. Level 3 has the right to substitute cash in lieu of delivering shares of its common stock. The transaction does not include ICG’s investments in New Global Telecom or Mpower Holding Corporation. Closing is expected to occur mid-year 2006 and is subject to customary closing conditions, including receipt of applicable state and federal regulatory approvals.
Level 3 expects to provide additional information concerning this transaction during its first quarter 2006 earnings call scheduled for Tuesday, April 25, 2006, at 10 a.m. EDT.
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.
