Advisers to a group of Lumen Technologies Inc. creditors and the telecommunications company have started negotiations for a deal that would give the company fresh cash and push out debt maturities, according to people familiar with the situation.
(Bloomberg) — Advisers to a group of Lumen Technologies Inc. creditors and the telecommunications company have started negotiations for a deal that would give the company fresh cash and push out debt maturities, according to people familiar with the situation.
Creditor advisers, which include Houlihan Lokey Inc. and Davis Polk & Wardwell, have signed non-disclosure agreements to discuss a debt plan after earlier making a preliminary proposal to the company, the people said. Since then, the advisers pitched a revised deal that centers around creditors providing the company with fresh cash, said the people, who asked not to be identified because the negotiations are private.
A key component of the proposal would allow Lumen to pursue debt buybacks at below-par prices, the people said. Holders also want to tighten credit documents to narrow Lumen’s ability to add more debt and limit the uses of proceeds from asset sales, they added.
The potential investment would be less than $1 billion and could sit at the company’s Level 3 Communications subsidiary, the people said. Talks are fluid, in the early stages and could fall apart, they added.
Lumen declined to comment. Messages left with Davis Polk were not returned. A representative for Houlihan declined to comment.
Lumen has more than $20 billion of long-term debt tied to multiple businesses. The proposal calls for near-term debt maturities to be extended, the people said.
Lumen Chief Financial Officer Christopher Stansbury said at a conference this week that discussions with bondholders have been “constructive” and the company is seeking to address its entire debt load.
Lumen is working with Guggenheim Securities LLC and Wachtell Lipton Rosen & Katz, Bloomberg previously reported.
Guggenheim declined to comment and messages to Wachtell were not returned.
The latest round of talks comes after the telecommunications company received a letter on July 25 from a group of creditors who requested a meeting to discuss the company’s debt maturities along with “what the letter referred to as an apparent event of default” by Level 3 Communications, the company said in a regulatory filing. Lumen at the time said it does not believe such an event of default occurred, according to the filing.
–With assistance from Erin Hudson.
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