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Outbyte Driver Updater FREEScan for outdated or missing drivers - takes under a minuteDriver Scan →Outbyte PC Repair FREERepair Windows errors before they cause bigger problemsFix Now →Level 3 Communications completed its acquisition of WilTel Communications Group on December 23, 2005—months ahead of the first-quarter 2006 closing schedule announced in October. The consideration was 115 million newly issued Level 3 shares and $386 million in cash, plus $100 million paid for $100 million of cash left in WilTel at closing. The deal included WilTel’s communications and Vyvx video-transmission businesses and a multi-year SBC contract, but excluded specified assets and liabilities.
When did Level 3 close the WilTel deal?
Level 3 announced the closing on December 23, 2005. The company had announced a definitive agreement with Leucadia National Corporation on October 31, with completion expected in the first quarter of 2006, subject to customary closing conditions, including state and federal regulatory approvals. The transaction therefore closed ahead of the announced schedule. Level 3’s closing announcement and its Form 8-K record the completion date.
CEO James Q. Crowe said in the closing announcement, “There is a unique and compelling fit between WilTel and Level 3. Because of this and hard work by all involved, we have been able to close this transaction ahead of schedule.” That is management’s explanation of the accelerated close, not an independent assessment of the deal.
How much did Level 3 pay?
The closing consideration combined shares and cash. The October announcement had set out different initial cash terms; the comparison below distinguishes those announced terms from the closing figures.
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| Term | October 31 announcement | December 23 closing |
|---|---|---|
| Level 3 common shares | 115 million | 115 million newly issued shares |
| Cash consideration | $370 million | Approximately $386 million, including an estimated $16 million excess-working-capital adjustment |
| Cash left in WilTel | Not stated in the October announcement | Level 3 paid an additional $100 million for $100 million in cash held by WilTel at closing |
The closing release said the cash consideration rose from $370 million to $386 million because WilTel’s working capital had improved. The Form 8-K describes the $16 million as an estimated excess-working-capital adjustment and says the final cash purchase price remained subject to post-closing adjustment once actual closing-date working capital was calculated. The additional $100 million payment for WilTel’s $100 million of cash at closing was separate from the approximately $386 million cash consideration. The closing release and the 8-K describe the terms.
What did Level 3 acquire?
The transaction covered WilTel’s communications business, its Vyvx video-transmission business, and a multi-year contract with SBC. Level 3’s annual filing likewise describes the acquired operations as including the communications and Vyvx businesses and the SBC contract. Level 3’s 2005 annual filing identifies the acquisition date as December 23, 2005.
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When the transaction was announced, Level 3 forecast that WilTel would contribute $1.5 billion to $1.6 billion in revenue in 2006, including revenue from the SBC master agreement. This was a company projection, not a reported result for 2006. Level 3’s October announcement states the forecast.
Contemporary Computerworld coverage reported Level 3’s estimates that the acquisition would add about 3,000 route miles and access to 50 markets. Those were company-provided estimates relayed in the article, not independently audited measures of the network acquired. Computerworld’s December 27, 2005 coverage also placed the transaction in the context of telecommunications consolidation that year.
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What was excluded from the transaction?
Level 3 did not acquire every WilTel asset or assume every WilTel liability. The October announcement said the headquarters building, outstanding debt, and mortgage obligations were outside the deal. The closing Form 8-K details additional exclusions and transfers:
- WilTel’s headquarters building and the mortgage note on it, from which WilTel was released before closing.
- Marketable securities and cash above the agreed $100 million left in WilTel.
- The right to receive $236 million in payments from SBC.
- Long-term debt, from which WilTel was released under its credit agreement before closing.
- Defined-benefit pension obligations, certain employee liabilities, and other specified claims.
The $236 million SBC payment right is distinct from the multi-year SBC contract included in the acquired operations. The 8-K describes the legal interest acquired as all outstanding membership units of WilTel Communications Group, LLC, subject to the specified asset and liability exclusions. The closing Form 8-K provides the transaction’s fuller legal scope.
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Why was it described as capping a buyout year?
The “big buyout year” framing reflects contemporary coverage of a busy year for telecommunications consolidation. Computerworld characterized the Level 3-WilTel transaction as a major carrier merger in that context; the available transaction figures do not establish that it was the year’s largest deal or quantify the total number or value of telecommunications buyouts in 2005.
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