Lumen Technologies

Transaction: LUMEN has completed a comprehensive recapitalization. Houlihan Lokey advised an ad hoc group of crossholders, holding $11bn of debt, who extended maturities and funded $1.3bn of new money. Ad Hoc Crossholder Advisor.

We are pleased to announce the successful recapitalization of Lumen Technologies, Inc. (NYSE:LUMN; Lumen) in the largest liability management transaction to date. Houlihan Lokey served as the exclusive financial advisor to an ad hoc group of crossholders holding approximately $11 billion of debt.
 
Lumen, formerly known as CenturyLink, is a leading provider of various communication and IT services to business, residential, government, and wholesale customers around the globe and the third-largest telecommunications services provider in the U.S. The company owns and operates a robust fiber-optic network spanning thousands of miles across the globe that allows it to deliver high-speed internet, reliable communications, and advanced digital services to its customers. 

Houlihan Lokey was engaged by a group of crossholders consisting of Lumen and Level 3 creditors in the summer of 2023 to negotiate a holistic capital structure solution with Lumen to maximize value for the company and its creditors. Following months of negotiations, in October 2023, the ad hoc group and Lumen announced a transaction support agreement and thereafter began extensive negotiations with certain other lenders to meet all conditions required to close the transaction. The ad hoc group and Lumen announced an amended transaction support agreement in January 2024 that had the support of the majority of Lumen and Level 3 creditors. This transaction provided a pathway for the company to extend its 2027 maturity wall, provided adequate liquidity to fund the operational turnaround business plan, and significantly enhanced creditor protections and collateral package. The key tenets of the transaction include:

  • Level 3:

    • $1.325 billion of New Money raised at Level 3 by ad hoc group members

    • Repricing of $3.7 billion of Level 3 secured debt to par in exchange for maturity extensions 

    • Uptier of $2.2 billion of Level 3 unsecured debt into second lien debt in exchange for maturity extensions 

    • Significant reductions in basket capacity across the structure 

  • Lumen:

    • Lumen RCF commitment reduction from $2.2 billion to $1.0 billion, with $500 million of commitments becoming first-out relative to all other Lumen debt 

    • Paydown of ~$575 million of Lumen TLB (15 points) and extension and repricing of remaining $3.3 billion of TLB into new Lumen super-priority debt

    • Paydown of participating ~$150 million of Lumen 4.0% senior secured notes (15 points) and extension and repricing of remaining ~$865 million notes into new Lumen super-priority debt

    • Paydown of ~$800 million of Lumen Term Loan A (66 points) and extension of remaining ~$400 million of participating term loan into new Lumen super-priority debt

    • Paydown of ~$115 million of Lumen unsecured notes and exchange of remaining ~$150 million of unsecured notes into new Lumen super-priority debt

The transaction closed on March 22, 2024. Houlihan Lokey served as the financial advisor to the ad hoc group.

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