Transcription
May 18,201 1Via Overnight CourierElizabeth O’Donnell, Executive DirectorKentucky Public Service Commission21 1 Sower BoulevardFrankfort, KY 40602-8294PUBLIC SERVICECOMMISSIONRe: Notice of Transaction Involving Level 3 Communications, Inc., Level 3Communications, L,LC, Broadwing Communications, LLK, WiITelCommunications,LLC), TelCove Operations, LLX, Global Crossing NorthAmerica, Inc., Global Crossing Telecommunications,Inc. and Global CrossingL,ocal Services, Inc.Dear Ms. O’Donnell:Level 3 Cominunications, Inc. (“Level 3”), Level 3 Communications, LLC(“Level 3 LLC”), Broadwing Cornmunications, LLC (“Broadwing”), WilTelCommunications, LLC (“WilTel”), and TelCove Operations, LLC (“TelCove”), GlobalCi.ossing NorthAmerica,Inc.(“GlobalCrossing”), GlobalCrossingTelecominunicatio is, Inc. (“GC Telecoininunications”) and Global Crossing LocalServices, Inc. (“GC Local”) (collectively, the “Parties”), through undersigned counseland pursuant to the Orders issued in Admin. Case No. 3.59 on June 21, 1996 and No. 370on January 8, 1998 and 807 KAR 5:Ol I , Section 1 1 , hereby notify the Commission thatthe Parties plan to consummate a transaction whereby Level 3 will acquire indirect controlof GC Telecommunications and GC L,ocal (together the “GC Companies”). As a part ofthat transaction, an indirect minority ownership interest in Level 3’s indirect subsidiaries,including L,evel 3 LLC, Broadwing, WilTel, and TelCove (collectively the “Level 3Companies”), will be transferred.BostonFra n I( f ti r IHart fordH o n g KongLondonL o s Angele:It is the Parties’ understanding that Commission approval is not required tocomplete the transactions described herein. Accordingly, the Parties submit this letter forinformational purposes only to ensure the continuing accuracy of the Commission’srecords.New YorhI11 support ofOrange Count)this filing, the Parties state:S a i l FrancisccS a n t a MoniccSilicon Valle)I.DESCRIPTION OF THE PARTIESTokycIWa 5 1:8il* toiBiiigham McCutchen LLF2020I( Street NMWashington, Df20006-180t1 1202373 6 0 0 t 1 202373 600b i n g h a m cor(A.Level 3Level 3 is a publicly traded (NASDAQ: LVLT) Delaware corporation withprincipal offices located at 102.5 Eldorado Boulevard, Broomfield, CO 80021. ApolloAmalgamation Sub, Ltd. (“Apollo Sub”), a Bermuda exempted limited liability companyand wholly owned subsidiary of Level 3, was recently formed for the purpose ofaccomplislii igthe proposed transaction. Level 3 provides high-quality voice aiid data
Elizabeth O’Donnell, Executive DirectorMay 18,201 1Page 2services to carriers, ISPs, and other business customers over its IP-based network throughits wholly owned indirect subsidiaries, the Level 3 Companies. The Level 3 Companiesare non-dominant carriers that are authorized to provide resold and/or facilities-basedtelecommunications services nationwide pursuant to certification, registration or tariffrequirements, or on a deregulated basis. The Level 3 Companies are also authorized bythe Federal Communications Coinmission (“FCC”) to provide international and domesticinterstate services as noli-dominant carriers.In Kentucky, Level 3 LLC is authorized to provide local exchangecommunications and resold intrastate interexchange telecommunications services underUtility ID Nos. 22250094 & 5009400, pursuant to registration and tariffs granted by theCominission on October 7 , 1998. Broadwing is authorized to provide interexchangetelecoitimunicatioiis services pursuant to registration and tariff authority granted by theCommission under Utility ID No. 5 167700. TelCove is authorized to provide localexchange and interexchange telecommunications services under Utility ID No. 501 9900,pursuant to registration and tariff authority granted by the Coinmission on October 16,1998. Wi1Tel is authorized to provide interexchange telecommiinications services andoperator services under Utility ID Nos. 222.5 1436 & 5 143600, pursuant to registrationand tariff authority granted by the Commission on February 18, 1999.Level 3 has the technical, managerial, and financial qualifications to acquirecontrol of the GC Companies. Level 3, through its operating subsidiaries, is a leadingglobal communications company, operating one of the world’s newest and mostadvanced telecoininuiiicatioiis platforms. The Level 3 network spans over 27,000 routemiles and delivers services to customers i n major markets across the TJnited States andEurope. It serves a substantial number of the world’s largest and most sophisticatedcommunications companies, including interexchange carriers, local phone companies,European PTTs, cable operators, ISPs, wireless companies, and Internet contentproviders. In 2010, Level 3 had worldwide communications revenues of 3.591 billionand total revenues of 3.651 billion. In addition, Level 3 is operated by a highlyqualified management team, all of whom have extensive backgrounds i ntelecommunications. Information concerning the legal, technical, managerial andfinancial qualifications of Level 3 was submitted with the various applications filed withthe Commission, and is, therefore, already a matter of record.B.Global Crossing and the GC CompaniesGlobal Crossing, a New York corporation, is headquartered at 225 KennethDrive, Rochester, New York 14623. Global Crossing’s indirect operating subsidiaries,the GC Companies, together with its other U S . and international affiliates, providetelecoinmunications solutions over the world’s first integrated global P-based network.Its core network connects more than 300 major cities in thirty countries worldwide, anddelivers services to more than 600 cities i n sixty countries and six continents around theglobe. The GC Companies and their affiliates offer a full range of managed data andvoice products to enterprise customers, carriers, mobile operators and ISPs.Bingham McCutchen LLP. . .-.
Elizabeth O’Donnell, Executive DirectorMay 18,201 1Page 3The GC Companies are Michigan corporations and wholly owned indirectsubsidiaries of Global Crossing. The GC Companies are authorized to provideteleco nmunications services as competitive, nondo ninant carriers pursuant tocertification, registration or tariff requirements, or on a deregulated basis i n all fifty statesand the District of Columbia. The GC Companies operate as nondo ninantdomesticGCinterstate telecominunications carriers under the FCC’ s blanket authority.Telecommunications also operates as an international telecommunications carrier throughFCC authority held by Global Crossing. In Kentucky, GC Telecommunications isauthorized to provide intrastate teleco nmunications services pursuant to authoritygranted by the Cornmission in CPCN Case No. 903 1 on November 2 I , 1984. GC Locali s aut hori zed to provide intrastate t el ecominunication s services pursuant to authoritygranted by the Coinmission i n Case No. 6 1-0254 on April 2, 2000.11.CONTACT INFORMATIONFor the purposes of this filing, contacts for the Parties are as follows:For Level 3:Catherine WangDanielle BurtRingham McCutchen L,LP2020 K Street, N.W.Washington, DC 20006Tel:(202) 373-6000Fax:(202) 373-6001Email: [email protected] iielle.burt@bingha n.cornand:and:Richard E. ThayerSenior CounselLevel 3 Communications, Inc.1025 Eldorado BoulevardBroomfield, CO 8002 1Tel: (720) 888-2516Fax: (720) 888-5 134III.For Global Crossing and the GCCompanies:Matthew BrillBrian MurrayLatharn RL Watkins LL,P555 Eleventh Street, N WSuite 1000Washington, DC 20004- 1 304Tel:(202) 637-2200Fax:(202) 637-2201Einail: matthew.brill @Iw.coinbrian.murray @ 1w.comPaul KouroupasVice President Regulatory AffairsGlobal Crossing200 Park AvenueFlorham Park, NJ 07932-0680Tel: (973) 937-0243Fax: (973) 360-0694TRANSFER OF CONTROL AND RELATED TRANSACTIONSOn April 1 1 , 201 1 , Level 3, Apollo Sub, and Global Crossing’s indirect parentcompany, Global Crossing Limited (“GCL”), entered into an Agreement and Plan ofAmalgamation (the “Agreement”) whereby Apollo Sub and GCL will be amalgamatedBingham McCutchen LLP
Elizabeth O'Donnell, Executive DirectorMay 18,201 IPage 4under Bermuda Law, which is essentially the same type of transaction as a merger tinderU.S. law. Pursuant to the Agreement, each issued and outstailding coininon share andconvertible preferred stock of GCL (other than any shares owned by Level 3, GCL, ortheir respective subsidiaries and any dissenting shares) will be exchanged for shares ofcommon stock of Level 3. In total, Level 3 currently expects to issue approximately 1.3billion shares. Following the transactio17 between GCL and Apollo Sub, the separatecorporate existence of Apollo Snb and GCL will cease, and the combined company,renamed Level 3 GC Limited, will exist as a wholly owned subsidiary of Level 3Financing and ultimately a wholly owned subsidiary of Level 3 LLC.' As a result of thetransaction, Level 3 will indirectly control the GC Companies.In addition, as a result of the exchange of shares in connection with the inerger,STT Crossing Ltd, a current direct shareholder in GCL, and an indirect shareholder inGlobal Crossing and the GC Companies, will obtain a minority interest of approximately24% in Level 3, and indirectly i n the Level 3 Companies, at closing.2 In addition,Southeastern Asset Management, Inc., which is currently the largest Level 3 stockholderwitli an approximate 30% beneficial ownership interest, will beneficially ownapproximately 15% of Level 3. Other than STT Crossing Ltd. and Southeastern AssetManagement, Inc., no other individual or entity is expected to hold 10% or inore of Level3. The majority of the Level 3 stock will continue to be held by current investors.Following consummation of the transaction, the GC Coinpanies will continue tooperate their facilities and provide service to their customers at the same rates, terms, andconditions, ensuring a seamless transition of ownership. For the Commission'sconvenience, pre- and post-transaction organizational charts are provided as Exhibit A.A copy of the Agreement is included in the SEC Form 8-K filed by Level 3 and isavailable at httr)://lvlt.clie it.sl arehoIde -.com/sec.cf n.IV.PUBLIC INTEREST CONSIDERATIONSThe Parties subinit that the transactions described herein will serve the publicinterest. The Parties expect that the inerger will enable the combined entity to better meetthe local, national and global needs of enterprises, wholesale buyers, and other customers.The traiisaction will bring together two successful carrier organizations that have provenIIininediately following the merger, L,evel 3 GC Limited will be a directsubsidiary of Level 3 Financing. Thereafter, L,evel 3 expects to complete a pro jbmzniiitracorporate transaction whereby L,evel 3 GC Limited will become a direct subsidiaryof Level 3 LLC.7Pursuant to a separate stockholder rights agreement, any future share acquisitionsby STT Crossing L,td would be subject to a limitation on its interest in Level 3 of 34.5%.Bingham McCutchen LLP
Elizabeth O’Donnell, Executive DirectorMay 18,201 1Page 5themselves in a highly competitive marketplace. The transaction will help create astronger competitor by bringing together each organization’s respective strengtlis.Operation as an integrated company will allow each of the operating companies to bemore competitive and to deliver greater value and variety of services to their customersthan they do individually.Moreover, the transaction will be conducted i n a manner that will be largelytransparent to customers of the Level 3 Companies and the GC Companies. Thetransaction will not result in a change of carrier for customers or any assignment ofauthorizations, and in no event will i t result in the discontinuance, reduction, loss, orimpairment of service to customers. Following consummation of the transaction, theLevel 3 Companies and the GC Companies will continue to provide high-qualitycommunicatinns services to their customers without interruption and without immediatecliange i n rates, terms or conditions.For various important business, tax and financial reasons, the Parties require thatthe transaction be closed as quickly as possible. Delay i n the regulatory process - andthus in the ability of the Parties to move forward promptly with the integration process risks creating uncertainty and Competitive harm. In particular, the competitivetelecotnmunications tnarketplace continues to be a very challenging businessenvironment. The proposed transaction is aimed at strengthening the competitiveposition of the combined entities and, therefore, delay in the regulatory approval processprevents the parties from realizing the economic benefits of integration of the carriers’networks or offering the expanded combined network footprint to customers as quickly asthe parties otherwise could. As stated above, it is the Parties’ understanding thatComtnission approval is not required to complete the transactions described herein. If theCommission believes that any additional information or actions are required, the Partiesurge it to address such concerns expeditiously.Bingham McCutclien LLP
Elizabeth O’Donnell, Executive DirectorMay 18,201 1Page 6V.CONCLUSIONFor the reasons stated above, the Parties respectfully submit that the publicinterest, convenience, and necessity would be furthered by the transfer of control andrelated transactions.An original and four (4) copies of this letter are enclosed for filing. Please datestamp the extra copy and return it in the envelope provided. If there are ally questionsregarding this matter, please feel free to contact the undersigned.Respectful I y submitted,Bingham McCutchen L L PCatherine WaiigDanielle BLII- Bingham McCutchen LLP2020 K Street, N.W.Wasliington, DC 20006Tel:(202) 373-6000Fax:(202) 373-6001Email:catherine.wa ig@biiigham [email protected] BrillBrian MurrayLatham &, Watkiiis LLP555 Eleventh Street, N WSuite 1000Washington, DC 20004- 1304(202) 637-2200Tel :Fax:(202) I w.comCounsel for L,evel 3 Communications, Iiic.,Level 3 Co nm iications,LLC, BroadwingCommunicatioiis, LLC, WilTelCommunications, LLC, and TelCoveOperations, LLCCounsel for Global Crossing NorthAmerica, Inc., Global CrossingTelecomin iications,Inc. and GlobalCrossing Local Services, Inc.
EXHIBIT APre- and Post-Transaction Organizational Charts
CiE.sr0000sr
YJJ-q
mUK
VERIFICATIONI, Paul Kouroupas, state that I am the Vice President Regulatory Affairs of GlobalCrossing North America, Inc. and its operating subsidiaries; that I am authorized to make thisVerification on behalf of Global Crossing North America, Inc. and its operating subsidiaries;that the foregoing filing was prepared under my direction and supervision; and that the contentswith respect to Global Crossing North America, Inc. and its operating subsidiaries are true andcorrect to the best of my lunowledge, information, and belief.I declare under penalty of perjury that the foregoing is true and correct. Executed this\51. day of May, 201 I .nPaul KouroupasVice President Regulatory AffairsGlobal Crossing North America, Inc.KYN74183491 2
VERIFICATIONI, Richard E. Tliayer, state that I am Senior Couiisel of Level 3 Communications, LLCaiid its subsidiaries; that I ani authorized to iiialte this Verification 011behalf of L,evel 3Coiiii iunicatioris,LLC and its subsidiaries; that tlie foregoing filing was prepared uiider mydirection and supervision; and that tlie coiiteiits with respect to Level 3 Coinmunications, LLCaiid its subsidiaries are tnie atid correct to the best of my luiowledge, iiifoimation, and belief.I declare uiider penalty of perjury that tlie foregoing is true and correct. Executed thismL;JRichard E. TliayerSenior CounselL,evel 3 Coiiiiiiuiiicatioiis, LLCA174183508 2
Communications, L,LC, Broadwing Communications, LLK, WiITel Communications, LLC), TelCove Operations, LLX, Global Crossing North . (“Apollo Sub”), a Bermuda exempted limited liability company and wholly owned subsidiary of Level 3, was recently formed for the purpose of accomplisl
