April 17, 2006 Broomfield, CO -- Level 3 Communications signed a definitive agreement to acquire all of the stock of ICG Communications, a privately held Colorado-based telecommunications company. Under terms of the agreement, Level 3 will pay total consideration of $163 million, consisting of $127 million in unregistered shares of Level 3 common stock and $36 million in cash. The number of shares to be delivered will be determined immediately prior to closing.
ICG primarily provides transport, IP, and voice services to wireline and wireless carriers, Internet service providers and enterprise customers. ICG's network has over 2,000 metro and regional fiber miles in Colorado and Ohio and includes approximately 500 points of presence. ICG serves more than 1,600 customers.
"ICG is a well-run business with a strong and growing base of customers," comments Kevin O'Hara, president and chief operating officer of Level 3. "This transaction gives Level 3 the opportunity to further expand our footprint into areas where we see demand for our services, and to realize cost savings."
"Level 3 has an excellent reputation in the communications industry," remarks Dan Caruso, president and CEO of ICG Communications. "We believe our customers and employees will be in good hands. ICG and its customers will benefit greatly from access to Level 3's expansive network and its broad suite of communications services. We look forward to working with the Level 3 team."
"ICG standalone is expected to generate approximately $75 to $80 million of annualized revenue and approximately $10 to $15 million of annualized positive cash flow after approximately $10 million in capital expenditures," adds Sunit S. Patel, chief financial officer of Level 3 Communications. "We expect annualized cash flow to improve to approximately $30 to $40 million once we have completed integration, which is expected to begin later this year."
The purchase price is subject to certain customary working capital adjustments. Level 3 has the right to substitute cash in lieu of delivering shares of its common stock. The transaction does not include ICG's investments in New Global Telecom or Mpower Holding Corporation. Closing is expected to occur mid-year 2006 and is subject to customary closing conditions, including receipt of applicable state and federal regulatory approvals.