Feb 4, 2003 : Level 3 Completes Genuity Transaction

📅 February 4, 2003 - Communications Carrier Level 3 Communications Inc. (Level3.com) announced on Tuesday that it has completed its acquisition of substantially all the assets and operations of IP communications company Genuity.

Level 3 says it has paid $60 million in cash to Genuity, plus $77 million in cash for prepayments to vendors for network services to be used by Level 3 during 2003. The company says it is also assuming certain of Genuity's long-terms service agreements. The cash consideration at closing was adjusted from the previously announced $242 million, including adjustments related to the timing of closing, employee severance reimbursements and other adjustments.
The cash provided by Level 3, along with the cash remaining on Genuity's balance sheet, will be used to pay creditors of Genuity, which filed for bankruptcy protection in 2002. The final dollar amount remains subject to additional adjustment within the next three months, but those adjustments are not expected to be significant.
Level 3 says that, as a result of the transaction, the company now operates one of the largest Internet backbones in the world, and provides internet connectivity for tens of millions of dial-up and broadband subscribers.
Along with the other benefits, Level 3 says it has negotiated contracts with Verizon and America Online, Geunity's largest customers. Verizon has signed new multi-year agreements, under which Level 3 will provide a range of services, including certain transport and IP services. Level 3 will also purchase certain services from Verizon. AOL has signed an agreement consenting to Level 3 acquiring its network services agreement with Genuity.
"This transaction marks the first major consolidation for the industry after the market turmoil of the past few years," said James Q. Crowe, chief executive officer of Level 3. "Industry observers have been anticipating consolidation and that a certain number of companies would emerge in a position of strength, with sustainable and profitable businesses. We believe this transaction makes Level 3 just such a company. The Genuity transaction brings together the strength and resources of two innovative industry leaders ? and positions Level 3 well for the long term."