Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an
Off-Balance Sheet Arrangement of the Registrant Level 3 Financing Tranche B 2027 Term Loan OnNovember 29, 2019 ,Level 3 Financing, Inc. ("Level 3 Financing"), aDelaware corporation and an indirect wholly owned subsidiary ofCenturyLink, Inc. ("CenturyLink"), entered into a thirteenth amendment agreement (the "Thirteenth Amendment Agreement") to the Existing Credit Agreement (as defined below) to incur$3,110,500,000 in aggregate borrowings under the Existing Credit Agreement through a new Tranche B 2027 Term Loan (the "Tranche B 2027 Term Loan"). The net proceeds of the Tranche B 2027 Term Loan, together with the proceeds of the Notes (as defined below), were used to pre-pay in fullLevel 3 Financing's Tranche B 2024 Term Loan under the Existing Credit Agreement in an aggregate outstanding principal amount of$4,610,500,000 . The Tranche B 2027 Term Loan matures onMarch 1, 2027 . The Tranche B 2027 Term Loan was priced to lenders at par, with the payment to the lenders of an upfront 25 basis point fee at closing. The Tranche B 2027 Term Loan has an interest rate, in the case of any ABR Borrowing (as defined in the Restated Credit Agreement), equal to (a) the greater of (i) the Prime Rate (as defined in the Restated Credit Agreement) in effect on such day, (ii) the Federal Funds Effective Rate (as defined in the Restated Credit Agreement) in effect on such day plus 1 / 2 of 1% and (iii) the sum of (A) the LIBO Rate (as defined in the Restated Credit Agreement) for a one month interest period on such day (which LIBO Rate will in no event be less than 0%) plus (B) 1.0%, plus (b) 0.75% per annum. In the case of any Eurodollar Borrowing (as defined in the Restated Credit Agreement), the Tranche B 2027 Term Loan bears interest at the LIBO Rate for the interest period for such borrowing (which LIBO Rate will in no event be less than 0%) plus 1.75% per annum. In connection with the Thirteenth Amendment Agreement,Level 3 Financing agreed that certain prepayments or "repricings" of the Tranche B 2027 Term Loan from the closing date of the Thirteenth Amendment Agreement untilMay 29, 2020 will be subject to a 1.00% premium.Level 3 Parent, LLC as guarantor ("Level 3 Parent"),Level 3 Financing , as borrower,Merrill Lynch Capital Corporation , as Administrative Agent and Collateral Agent, and certain other agents and certain lenders are party to that certain Credit Agreement, dated as ofMarch 13, 2007 , as amended and restated by that certain Twelfth Amendment Agreement, dated as ofFebruary 22, 2017 (the "Existing Credit Agreement"). The Existing Credit Agreement as further amended and restated by the Thirteenth Amendment Agreement is referred to herein as the "Restated Credit Agreement."Level 3 Financing's obligations under the Tranche B 2027 Term Loan are, subject to certain exceptions, secured by certain of the assets of (i)Level 3 Parent and (ii) certain ofLevel 3 Parent's material domestic subsidiaries which are engaged in the telecommunications business and which were able to grant a lien on their assets without regulatory approval.Level 3 Parent and certain of its subsidiaries have also guaranteed the obligations ofLevel 3 Financing under the Tranche B 2027 Term Loan. Upon obtaining regulatory approvals,Level 3 Communications, LLC , an indirect, wholly owned subsidiary ofLevel 3 Parent ("Level 3 LLC"), and certain other material domestic subsidiaries of Level 3 Pare nt
will guarantee and, subject to certain exceptions, pledge certain of their assets to secure, the obligations under the Tranche B 2027 Term Loan. The Thirteenth Amendment Agreement effected certain amendments to the Restated Credit Agreement to, among other things, (i) increase certain "baskets" or threshold ratios applicable under the restrictive covenants set forth therein, (ii) change certain provisions relating to obtaining "investment grade" ratings and the related suspension of certain covenants, (iii) change certain calculations used to measure EBITDA for the purpose of certain restrictive covenants and (iv) to "freeze" the treatment of capital lease obligations under generally accepted accounting principles. The terms of the Restated Credit Agreement are otherwise substantially the same as those in the Existing Credit Agreement.
--------------------------------------------------------------------------------
The foregoing description of the Thirteenth Amendment Agreement does not purport to be complete and is qualified in its entirety by reference to the Thirteenth Amendment Agreement and the accompanying Restated Credit Agreement, a copy of which is attached as Exhibit 10.1 hereto and is incorporated herein by reference.Level 3 Financing Senior Secured Notes Also onNovember 29, 2019 ,Level 3 Financing entered into two separate indentures (each an "Indenture", and collectively, the "Indentures") withThe Bank of New York Mellon Trust Company, N.A. , as trustee and collateral agent, in connection withLevel 3 Financing's issuance of (i)$750,000,000 aggregate principal amount of its 3.400% Senior Secured Notes due 2027 (the "2027 Notes") and (ii)$750,000,000 aggregate principal amount of its 3.875% Senior Secured Notes due 2029 (the "2029 Notes" and together with the 2027 Notes, the "Notes"). The net proceeds from the offering of the Notes, together with the net proceeds of the Tranche B 2027 Term Loan, were used
to
refinanceLevel 3 Financing's Tranche B 2024 Term Loan under the Existing Credit Agreement. Interest on the 2027 Notes will accrue fromNovember 29, 2019 and is payable onMarch 1 andSeptember 1 of each year, beginning onMarch 1, 2020 . Interest on the 2029 Notes will accrue fromNovember 29, 2019 and is payable onMay 15 andNovember 15 of each year, beginning onMay 15, 2020 . Each series of the Notes are (i) unsubordinated and secured obligations ofLevel 3 Financing , ranking equal in right of payment with all existing and future indebtedness ofLevel 3 Financing that is not expressly subordinated in right of payment to the Notes; (ii) secured on a senior lien basis by the collateral securing the Notes, subject to a shared lien of equal priority with the other senior secured obligations ofLevel 3 Financing secured by such collateral ofLevel 3 Financing and subject to other liens permitted by the applicable indenture related to such series of Notes; (iii) effectively senior to all existing and future senior unsecured indebtedness ofLevel 3 Financing to the extent of the value of the collateral provided byLevel 3 Financing (after giving effect to the sharing of such value with holders of equal ranking liens on such collateral); (iv) contractually senior in right of payment to all existing and future indebtedness ofLevel 3 Financing that is expressly subordinated in right of payment to such series of Notes; (v) effectively subordinated to any obligations ofLevel 3 Financing secured by liens on assets ofLevel 3 Financing that do not constitute collateral, to the extent of the value of such assets; and (vi) effectively subordinated to all liabilities ofLevel 3 Financing's subsidiaries that are not guarantors. For all purposes under the applicable indenture, holders of a series of Notes will vote, consent or otherwise take action as a separate class and not jointly with the other series of Notes. The Notes are fully and unconditionally guaranteed, jointly and severally, on an unsubordinated and secured basis byLevel 3 Parent and certain ofLevel 3 Parent's material domestic subsidiaries which are engaged in the telecommunications business and which were able to guarantee the Notes without regulatory approval and, subject to the receipt of applicable regulatory approvals, Level 3 LLC and other material domestic subsidiaries ofLevel 3 Financing will guarantee each series of Notes. The Notes and, subsequent to receipt of any requisite governmental authorizations and consents, each such guarantee will be secured by the same collateral pledged byLevel 3 Financing or such guarantor, as the case may be, to secure the Existing Credit Agreement or the guarantee thereof of each such guarantor, as applicable. The 2027 Notes will be subject to redemption at the option ofLevel 3 Financing , in whole or in part, at any time or from time to time, upon not less than 10 nor more than 60 days' prior notice, (i) prior toJanuary 1, 2027 at 100% of the principal amount of 2027 Notes so redeemed plus (A) the applicable make-whole premium set forth in the Indenture, as of the redemption date and (B) accrued and unpaid interest thereon (if any) up to, but not including, the redemption date, and (ii) on and afterJanuary 1, 2027 , at 100% of the principal amount of 2027 Notes so redeemed plus accrued and unpaid interest thereon (if any) up to, but not including the redemption date. The 2029 Notes will be subject to redemption at the option ofLevel 3 Financing , in whole or in part, at any time or from time to time, upon not less than 10 nor more than 60 days' prior notice, (i) prior toAugust 15, 2029 at 100% of the principal amount of 2029 Notes so redeemed plus (A) the applicable make-whole premium set forth in the Indenture, as of the redemption date and (B) accrued and unpaid interest thereon (if any) up to, but not including, the redemption date, and (ii) on and afterAugust 15, 2029 , at 100% of the principal amount of 2029 Notes so redeemed plus accrued and unpaid interest thereon (if any) up to, but not including the redemption date.
--------------------------------------------------------------------------------
The offering of each series of Notes was not registered under the Securities Act of 1933, as amended, and the Notes may not be offered or sold inthe United States absent registration or an applicable exemption from registration requirements. The Notes were sold to persons reasonably believed to be "qualified institutional buyers" as defined in Rule 144A under the Securities Act of 1933, as amended, and non-U.S. persons outsidethe United States under Regulation S under the Securities Act of 1933, as amended. The foregoing description of each of the Indentures does not purport to be complete and is subject to, and qualified in its entirety by, the full text of each of the Indentures. A copy of the 2027 Indenture is attached as Exhibit 10.2 hereto and a copy of the 2029 Indenture is attached as Exhibit 10.3 hereto, each of which is incorporated herein by reference. Item 8.01. Other Events
On
(d) Exhibits 10.1 Thirteenth Amendment Agreement to the Amended and Restated Credit Agreement, dated as ofNovember 29, 2019 , amongLevel 3 Parent, LLC ,Level 3 Financing, Inc. , the Lenders party thereto andMerrill Lynch Capital Corporation . 10.2 Indenture, dated as ofNovember 29, 2019 , amongLevel 3 Parent, LLC and the other guarantors party thereto,Level 3 Financing, Inc. , as Issuer, andThe Bank of New York Mellon Trust Company, N.A. , as Trustee and Notes Collateral Agent, relating to the 3.400% Senior Secured Notes due 2027 ofLevel 3 Financing, Inc. 10.3 Indenture, dated as ofNovember 29, 2019 , amongLevel 3 Parent, LLC and the other guarantors party thereto,Level 3 Financing, Inc. , as Issuer, andThe Bank of New York Mellon Trust Company, N.A. , as Trustee and Notes Collateral Agent, relating to the 3.875% Senior Secured Notes due 2029 ofLevel 3 Financing, Inc. 99.1 Press Release, datedDecember 2, 2019 , relating to the Completion of the Offering ofLevel 3 Financing's Senior Secured Notes and Senior Secured Credit Agreement. 104 Cover Page Interactive Data File (formatted in iXBRL in Exhibit 101)
--------------------------------------------------------------------------------
© Edgar Online, source