BROOMFIELD, Colo., June 6, 2011 /PRNewswire/ -- Level 3 Communications, Inc. (NASDAQ: LVLT) today announced that its Board of Directors has determined that the acquisition of more than 4.9 percent of the company's shares of common stock by an institutional investor, as reported on a Schedule 13G filed with the SEC on May 23, 2011, is an exempted transaction for purposes of the stockholder rights plan adopted by the company on April 10, 2011 to protect the company's federal Net Operating Losses (NOLs) (the "NOL Rights Plan").
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The purpose of the NOL Rights Plan is to deter trading that would result in an "ownership change" as defined under Internal Revenue Code of 1986 Section 382. In general, this would occur if certain ownership changes related to the company's stock that is held by five percent or greater stockholders exceed 50 percent, measured over a rolling three-year period. The NOL Rights Plan is also designed to protect the company's ability to use its NOLs in the future, in order to prevent the reduction in stockholder value that would result from the loss of the NOLs.
Pursuant to the NOL Rights Plan, when a person or group has obtained beneficial ownership of 4.9 percent or more of Level 3's common stock outstanding at the time of such acquisition, or an existing holder with greater than 4.9 percent ownership acquires more shares representing at least an additional 0.5 percent of Level 3's common stock outstanding at the time of such acquisition, there would be a triggering event causing significant dilution in the economic interest and voting power of that person or group. The company's Board of Directors has the discretion to exempt any person or group for purposes of the NOL Rights Plan if it determines the acquisition by that person or group will not jeopardize tax benefits or is otherwise in the company's best interests.
Additional information regarding the NOL Rights Plan is contained in a Form 8-K and a Registration Statement on Form 8-A that were previously filed by the company with the SEC.
The institutional investor informed the company that it inadvertently exceeded the 4.9% limit set forth in the NOL Rights Plan and has agreed to promptly sell a portion of the common stock which it beneficially owns, such that after giving effect to such sale, the institutional investor will beneficially own, in the aggregate, less than 4.9% of the outstanding shares of common stock of the company. The institutional investor has also agreed to not purchase any additional shares of common stock. Management of the company has determined that the acquisition of shares by the institutional investor did not jeopardize or endanger the availability to the company of any federal income tax benefit and will not limit the ability of the company to use its NOLs in the future.
About Level 3 Communications
Level 3 Communications, Inc. (NASDAQ: LVLT) is a leading international provider of fiber-based communications services. Enterprise, content, wholesale and government customers rely on Level 3 to deliver services with an industry-leading combination of scalability and value over an end-to-end fiber network. Level 3 offers a portfolio of metro and long-haul services, including transport, data, Internet, content delivery and voice. For more information, visit www.level3.com.
© Level 3 Communications, LLC. All Rights Reserved. Level 3, Level 3 Communications and the Level 3 Communications Logo are either registered service marks or service marks of Level 3 Communications, LLC and/or one of its Affiliates in the United States and/or other countries. Level 3 services are provided by wholly owned subsidiaries of Level 3 Communications, Inc. Any other service names, product names, company names or logos included herein are the trademarks or service marks of their respective owners.
Forward-Looking Statement
Some of the statements made in this press release are forward looking in nature. These statements are based on management's current expectations or beliefs. These forward looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside Level 3's control, which could cause actual events to differ materially from those expressed or implied by the statements. The most important factors that could prevent Level 3 from achieving its stated goals include, but are not limited to: the current uncertainty in the global financial markets and the global economy; a discontinuation of the development and expansion of the Internet as a communications medium and marketplace for the distribution and consumption of data and video; and disruptions in the financial markets that could affect Level 3's ability to obtain additional financing. Additional factors include, but are not limited to, the Company's ability to: increase and maintain the volume of traffic on its network; develop effective business support systems; manage system and network failures or disruptions; develop new services that meet customer demands and generate acceptable margins; defend intellectual property and proprietary rights; adapt to rapid technological changes that lead to further competition; attract and retain qualified management and other personnel; successfully integrate acquisitions; and meet all of the terms and conditions of debt obligations. Additional information concerning these and other important factors can be found within Level 3's filings with the Securities and Exchange Commission. Statements in this press release should be evaluated in light of these important factors. Level 3 is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.
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Monica Martinez |
Mark Stoutenberg |
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720-888-3244 |
720-888-2518 |
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SOURCE Level 3 Communications, Inc.
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