Aug 24, 2001 : Level 3 Acquisition of Viatel Approved

📅 August 24, 2001 - Level 3 Communications, Inc. (level3.com) has announced onThursday that it has acquired the transatlantic network of Viatel, Inc(viatel.com).

A federal judge overseeing Viatel's Chapter 11 bankruptcy proceedingsapproved Level 3's purchase on Tuesday, and the transaction was closed onWednesday. Specifically, Level 3 has purchased from Viatel two fibers on the"Yellow" submarine cable connecting London and New York. This is the samefiber pair that Level 3 sold to Viatel in April 2000. Level 3 now owns andcontrols 50 percent of the fibers on the Yellow cable.
Under the terms of the transaction, Level 3 retains all cash paymentsalready made by Viatel under the April 2000 contract, including $94 millionpaid to Level 3 at the end of last year. In return for the Yellow fiberpair, Level 3 has released Viatel from debts registered with the bankruptcycourt totaling approximately $9 million. Viatel has also transferred 20gigabits of capacity on the separate transatlantic cable known as "AC-1" toLevel 3.
"We believe this transaction will create value for us, and we continue tolook for opportunities as they develop in the current market environment,"said Kevin O'Hara, Level 3's president and COO. O'Hara said that Level 3continues to take a strategic approach in managing its inventory of underseanetwork assets. "With this transaction, we have effectively cut in half ourcost basis for transatlantic capacity," O'Hara said. "Our objective is toensure we have the appropriate amount of low-cost bandwidth available toconnect our terrestrial networks as we continue to expand our internationalcustomer base."
The key provisions of the Level 3-Viatel transaction approved by the judgeoverseeing Viatel's bankruptcy include:
Level 3 retains the cash payments already received from Viatel underLevel 3's original sale of transatlantic fiber announced in April 2000,including $94 million received by Level 3 at the end of last year.Viatel has transferred ownership of its fiber pair on the Yellowcable back to Level 3.Level 3 now owns 50 percent of the fiber on that cable.Viatel has transferred backhaul fiber and 20 gigabits of capacity onthe AC-1 transatlantic cable to Level 3. Those assets were originally soldto Viatel under the April 2000 contract.Level 3 has released Viatel from debts it registered with thebankruptcy court totaling approximately $9 million. Level 3has also paidViatel $100,000 in cash.Level 3 will provide Viatel with two unprotected 2.5-gigabitwavelengths on the Yellow cable. Viatel will pay $500,000 in cash to Level3to cover one year's operation and maintenance charges on thewavelengths and other costs.