Feeds

S&P slams Level 3 acquisition plans

Credit rating cut

  • alert
  • submit to reddit

Top 5 reasons to deploy VMware with Tegile

ComputerWire: IT Industry Intelligence

Level 3 Communications Inc's ambitions to lead the consolidation among global carriers were dealt a blow yesterday when ratings agency Standard & Poor's cut its credit rating and poured scorn on its acquisitive ambitions.

With a debt burden that led to interest payments of $646m in its last financial year, the agency fears that Level 3 could strain its financial resources by taking over other loss-making carriers. S&P analyst Michael Tsao said that given Level 3's substantial leverage, weak interest coverage and limited liquidity, "the company is not well positioned to deal with such weak industry fundamentals."

Level 3 shares had surged ahead since news in July that it had raised $500m in bonds from a group of corporate investors including Berkshire Hathaway, which is chaired by Warren Buffet. This gave the Broomfield, Colorado-based company a $1.5bn war chest. More importantly, the fact that investment sage Buffet, who has been deeply skeptical about IT stocks, is backing the company gave it the credibility it has lacked.

News that S&P had cut its rating a notch to triple C- from triple C+ led the share price fall 9% to $5.46. Currently Level 3 is eyeing Williams Communications Group Inc, the troubled telecoms carrier that has been in Chapter 11 since April.

© ComputerWire

Related stories

Level 3 bids for Chapter 11 rival
Buffet and friends sub Level 3 $500m for acquisitions
Level 3 buys Software Spectrum

Secure remote control for conventional and virtual desktops

More from The Register

next story
Bladerunner sequel might actually be good. Harrison Ford is in it
Go ahead, you're all clear, kid... Sorry, wrong film
Musicians sue UK.gov over 'zero pay' copyright fix
Everyone else in Europe compensates us - why can't you?
I'll be back (and forward): Hollywood's time travel tribulations
Quick, call the Time Cops to sort out this paradox!
Megaupload overlord Kim Dotcom: The US HAS RADICALISED ME!
Now my lawyers have bailed 'cos I'm 'OFFICIALLY' BROKE
Euro Parliament VOTES to BREAK UP GOOGLE. Er, OK then
It CANNA do it, captain.They DON'T have the POWER!
Forget Hillary, HP's ex CARLY FIORINA 'wants to be next US Prez'
Former CEO has political ambitions again, according to Washington DC sources
prev story

Whitepapers

Go beyond APM with real-time IT operations analytics
How IT operations teams can harness the wealth of wire data already flowing through their environment for real-time operational intelligence.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
Why CIOs should rethink endpoint data protection in the age of mobility
Assessing trends in data protection, specifically with respect to mobile devices, BYOD, and remote employees.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Seattle children’s accelerates Citrix login times by 500% with cross-tier insight
Seattle Children’s is a leading research hospital with a large and growing Citrix XenDesktop deployment. See how they used ExtraHop to accelerate launch times.