Level 3 to lay off 450, hires new president/COO

Fiber-and-telecom giant Level 3 will lay off around 450 employees, making up eight percent of its workforce, according to information released by the Broomfield, Colo.-based company on Tuesday.

The layoffs are expected to be confined to North American operations. The CDN (content delivery network delivery markets) groups, which handle video streaming services and the like, are not expected to take any cuts. The layoffs are starting now and should be effected by the end of December.

Monday was, by the way, the first day as Level 3 president and COO for Jeff K. Storey. Storey was most recently with Leucadia National, and was president and CEO of WilTel until that firms sale to Level 3 back in December 2005.

The company's also adjusting three tender offers it made back in mid-November to buy back its outstanding 2.875% Convertible Senior Notes due in 2010, 6% Convertible Subordinated Notes due in 2010, and 6% Convertible Subordinated Notes due in 2009.

When that tender offer was announced, the company said that the considerations to be paid on the buybacks were, per $1,000 principal amount, $620, $700 and $920 respectively.

Level 3 says that a group of investors has agreed to purchase $360,124,000 (the principal) on the 2013 notes, and has deposited that large sum in escrow. The cash will be released from escrow when Level 3 is tendered and accepts payment of at least 50% of the aggregate principal on the other two notes. Fifty percent of those two notes works out to, respectively, $177,270,500 and $240,833,000.

There's a fourth set of notes in play as well, a 15% Convertible Senior Note due in 2013. Consistent with SEC requirements regarding the satisfaction or waiver of financing conditions having to do with equity-linked tender offers, Level 3 said today that it has waived the financing condition to the tender offers that Level 3 shall have sold at least $373 million aggregate principal amount of its 15% Convertible Senior Notes due 2013. No other condition is waived.

The entire assortment of tender offers expires at midnight EST on December 15, unless Level 3 extends the terms on an individual offer for whatever reason.

Level 3 reported 3Q results on October 23, presenting consolidated revenue of $1.07 billion and a net loss of $120 million or 8 cents/share. On NASDAQ today, Level 3 stock down 7.04%, to 0.75 cents/share.

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