| Item 1.01 | Entry into a Material Definitive Agreement. |
Indentures Relating to the Issuance of the New Notes
In connection with the Early Settlement Transactions, (1) Lumen, as issuer, certain guarantors party thereto, Regions Bank, as trustee, and Bank of America, N.A., as collateral agent, entered into an indenture, dated September 24, 2024 (the “Lumen Indenture”), which governs the terms of the New Lumen Notes issued on such date, and (2) Level 3, as issuer, Level 3 Parent, LLC (“Level 3 Parent”), as a guarantor, certain other guarantors party thereto, U.S. Bank Trust Company, National Association, as trustee, and Wilmington Trust, National Association, as collateral agent, entered into an indenture, dated September 24, 2024 (the “Level 3 Indenture” and, together with the Lumen Indenture, the “Indentures” and each, an “Indenture”), which governs the terms of the New Level 3 Notes issued on such date. Capitalized terms used but not defined herein have the meaning ascribed to them in the applicable Indenture.
The New Notes will mature on October 15, 2032. Interest on the New Notes will accrue from the Issue Date and is payable on April 15 and October 15 of each year, beginning on April 15, 2025.
The New Notes are subject to redemption at the option of the Issuer, in whole or in part, at any time or from time to time after the Issue Date at a price equal to 100.0% of the principal amount of the New Notes so redeemed, plus any accrued and unpaid interest thereon to, but not including, the redemption date.
On each interest payment date after the fifth anniversary of the Issue Date, each Issuer is required to redeem for cash at a price equal to 100.0% of the principal amount of the New Notes redeemed on such interest payment date (plus any accrued and unpaid interest) such portion of the New Notes on a pro rata basis necessary to prevent such New Notes from being treated as an “applicable high yield discount obligation” within the meaning of Section 163(i) of the Internal Revenue Code of 1986, as amended, subject to certain exceptions set forth in the applicable Indenture.
Upon the occurrence of certain specified change of control events, the Issuer will, subject to certain limited exceptions, be required to make an offer to repurchase the New Notes at a price in cash equal to 101% of the principal amount of the New Notes so redeemed, plus any accrued and unpaid interest thereon.
The Indentures provide for certain customary events of default, including, among others, the (i) failure to pay principal or premium (if any) or interest (subject to a grace period) on the New Notes when due; (ii) failure of the Issuer and certain other entities to perform specified covenants or agreements continued for 90 days after written notice with respect thereto to the Issuer by the Trustee or the holders of at least 30% of the aggregate principal amount of such New Notes then outstanding; or (iii) occurrence of certain specified defaults, payment of final judgments, bankruptcy proceedings, insolvencies or other events. In addition, subject to the terms and conditions set forth in the Indentures, if certain specified events of default with respect to the New Notes occur and are continuing, either the Trustee or holders of at least 30% of the aggregate principal amount of the New Notes then outstanding may declare the principal of the New Notes to be due and payable immediately.
The Indentures contain certain restrictive covenants, including covenants limiting the incurrence of additional indebtedness, liens and certain corporate transactions. These covenants are subject to a number of important limitations and exceptions.
Additional information regarding each series of New Notes is set forth below.
The New Lumen Notes (i) are contractually subordinated in right of payment to indebtedness of Lumen under its Series A Revolving Facility to the extent set forth in the Lumen Indenture, in an amount limited to the sum of $500,000,000 plus certain specified past due interest, fees or expense thereunder (collectively, the “Lumen Series A Revolver Priority Cap”); (ii) are otherwise senior and unsecured obligations of Lumen, ranking equal in right of payment with all existing and future indebtedness of Lumen that is not expressly subordinated in right of payment to the New Lumen Notes; (iii) are contractually senior in right of payment to all existing and future indebtedness of Lumen that is expressly subordinated in right of payment to the New Lumen Notes; (iv) are effectively subordinated to any obligations of Lumen secured by liens on assets of Lumen, to the extent of the value of such assets; and (v) are effectively subordinated to all liabilities, including trade payables, of Lumen’s subsidiaries that do not guarantee the New Lumen Notes.
2
