Level 3 Communications, reporting what it called "a strong fourth quarter" in which its losses increased to $237 million, says it's going to lay off 1,000 workers as it trims overhead following last year's string of acquisitions, and it will borrow $500 million to refinance debt.
Thus the need to cut the work force, Level 3 explained. "As expected, Level 3 plans to eliminate duplicative positions where appropriate as it integrates the companies it has acquired over the past year," the company said in a prepared statement. Level 3 employed 5,800 people as of year-end 2006, including roughly 2,000 at its headquarters in Colorado. In early January, the work force swelled to about 7,400 with the completion of the acquisition of Texas-based Broadwing, which employed about 1,600.
It pointed to a just-announced repayment of $488 million of 12.875-percent notes due in 2010 with proceeds from a new note offering, and the refinancing of its existing $730 million senior secured credit facility. "Taken together, these transactions are expected to improve liquidity by lowering interest expense and extending the company's maturity profile," S&P said. However, it didn't immediately raise the rating on the company's debt - which remains deep in the dungeon. S&P rates Level 3's senior unsecured debt at "CCC-minus," which is either its third lowest junk grade or nine levels below investment grade, depending on how you want to characterize it.