Feeds

Level 3 bids for Chapter 11 rival

Bankrupt strategy

  • alert
  • submit to reddit

The essential guide to IT transformation

ComputerWire: IT Industry Intelligence

Level 3 Communications Inc has begun its self-appointed task of carrying out a wide-ranging consolidation among global carriers by putting in a bid for Williams Communications Group Inc, which has been in Chapter 11 bankruptcy protection since April.

According to information leaked to the Wall Street Journal, Level 3 has offered $1.1bn for a company that operates a 33,000-mile US fiber-optic network. The one complication is that Williams has just negotiated a debt-for-equity swap that will enable it to emerge from Chapter 11.

Earlier this month Level 3 proclaimed its ambition to lead the consolidation amongst carriers when it raised $500m in bonds from a group of corporate investors including Berkshire Hathaway, which is chaired by investment sage Warren Buffet. This gave the Broomfield, Colorado-based company a $1.5bn war chest to build a worldwide communications empire.

Level 3 CEO James Crowe said the ongoing shakeout in telecoms is creating "extraordinary opportunities" as companies, their network assets, and customer bases become available.

Tulsa, Oklahoma-based Williams ran up debts of almost $6bn before it filed for Chapter 11 and will be the first of a number of acquisitions planned by Level 3 to build its global empire. Yet there are bound to be doubts at to whether Level 3 has the expertise to be a major player.

The company only avoided running foul of covenants attached to its bank loans by buying software resellers to boost its sales. Its first-half figures released earlier this month showed that its own communications revenue shrank by 22.3% to $554m. This hardly suggests a level of management skills to turn round other loss-making operators.

© ComputerWire

Boost IT visibility and business value

More from The Register

next story
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
Banking apps: Handy, can grab all your money... and RIDDLED with coding flaws
Yep, that one place you'd hoped you wouldn't find 'em
No, thank you. I will not code for the Caliphate
Some assignments, even the Bongster decline must
Barnes & Noble: Swallow a Samsung Nook tablet, please ... pretty please
Novelslab finally on sale with ($199 - $20) price tag
Ballmer leaves Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Primetime precrime? Minority Report TV series 'being developed'
I have to know. I have to find out what happened to my life
Broadband slow and expensive? Blame Telstra says CloudFlare
Won't peer, will gouge for Internet transit
Netflix swallows yet another bitter pill, inks peering deal with TWC
Net neutrality crusader once again pays up for priority access
prev story

Whitepapers

Best practices for enterprise data
Discussing how technology providers have innovated in order to solve new challenges, creating a new framework for enterprise data.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Advanced data protection for your virtualized environments
Find a natural fit for optimizing protection for the often resource-constrained data protection process found in virtual environments.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?