Feb 3, 2002 : Level 3 Quells Talks of Bankruptcy

📅 February 3, 2002 - Bandwidth and connectivity firm Level 3 Communications issued a public statement Friday reassuring investors that it did not expect to file for bankruptcy protection.
The statement was in response to public speculation that the company might file for Chapter 11 following its fourth quarter earnings report.
In the report, the company said it could "violate a revenue-based financial covenant" which requires the company to reach a target amount of telecom revenues. The company said it might violate the covenant " as early as the end of the second quarter," prompting concern among investors.
Level 3, however, was quick to point out that while it might violate the covenant, it considered the violation "far less serious than a potential payment violation," James Q. Crowe, CEO of Level 3, said in today's statement.
"Based on our financial situation as it exists today, we do not envision any scenario whereby Level 3 would have a payment default with respect to not only our senior secured credit facility, but also any other Level 3 debt," Crowe said. "As a consequence, we also do not anticipate a scenario under which Level 3 would expect to seek protection from its creditors under the bankruptcy statutes."
Crowe blamed the speculation on the bankruptcies of Global Crossing and McLeod USA, both of which filed for Chapter 11 earlier this week.
"This speculation is no doubt fueled by the spate of bankruptcy filings in the telecommunications sector, including two this very week," he said.
On Tuesday, Level 3 posted a fourth-quarter net loss of $3.3 billion, compared with a loss of $552 million a year ago.