Level 3's forecast reaffirmation buoys shares 9%
Investors breathed a sigh of relief after Level 3 Communications (NYSE: LVLT) reaffirmed its full year core earnings outlook and said that, unlike many other carriers in the space, it was not overly worried about the situation in Europe.
The reaffirmation cooled investor concerns that carrier spending was slowing and that the company's European exposure could come into play. Company shares were up 9 percent as a result.
Level 3 said it was standing by a forecast of a 20-25 percent increase in adjusted EBITDA for 2012 and that it expected core network services revenue to grow sequentially for the rest of the year.
A global spending slowdown is putting a hurt on telecom providers across the board, especially in Europe where, according to D.A. Davidson & Co. analyst Donna Jaegers, in a Reuters story, about 12 percent of Level 3's revenues derive.
In other Level 3 news, the company said it would sell $300 million "aggregate principal amount of its 8.875 percent Senior Notes" in a private offering to qualified institutional buyers. Proceeds of the offering, which is expected to be completed on Aug. 1, will be "used for general corporate purposes, including the potential repurchase, redemption, repayment or refinancing" of company and subsidiary indebtedness "from time to time," a statement on the Level 3 Web page said.
"The new 8.875 percent Senior Notes were priced to investors at 100 percent of their principal amount and will mature on June 1, 2019," the company announced. They "will not be guaranteed by any of the company's subsidiaries."