Business Context and Reporting Period
This Form 8-K Current Report was filed by CenturyLink, Inc. on June 16, 2011. The filing details the completion of a public debt offering and outlines the intended use of proceeds to fund the pending acquisition of SAVVIS, Inc. (Savvis).
Key Financial Metrics
Debt Issuance: CenturyLink completed the sale of $2.0 billion in aggregate principal amount of unsecured senior notes.
- Series P Notes: $400 million at 7.60% interest, due 2039.
- Series R Notes: $350 million at 5.15% interest, due 2017.
- Series S Notes: $1,250 million at 6.45% interest, due 2021.
Proceeds: After deducting underwriting discounts and estimated expenses, the company expects to receive net proceeds of approximately $1.959 billion.
Liquidity and Cash Flow: The filing does not provide specific current cash flow, revenue, or profit metrics. Liquidity is addressed through the new debt issuance and existing credit facilities.
Material Changes and Use of Proceeds
The primary material change is the increase in long-term debt obligations. The net proceeds from the offering, combined with cash on hand and potential borrowings under the credit facility, are designated for:
- Funding the cash portion of the merger consideration for the acquisition of Savvis.
- Refinancing the credit facility debt of Savvis.
- Paying fees and expenses related to the merger.
The acquisition of Savvis is anticipated to close in the second half of 2011, subject to closing conditions.
Outlook, Risks, and Contingencies
Management Commentary: The company expects to close the Savvis acquisition in the second half of 2011. Interest payments on the new notes will commence semi-annually, with the first payments due in September 2011 (Series P) and December 2011 (Series R and S).
Risks and Contingencies: The filing highlights several forward-looking risks, including:
- Failure to successfully complete the Savvis acquisition due to regulatory or stockholder approval issues.
- Changes in financial position or cash requirements.
- Access to credit markets or borrowings under the credit facility on favorable terms.
Redemption Terms: CenturyLink may redeem the notes at any time at a price equal to 100% of the principal plus the present value of remaining payments discounted at the Treasury Rate plus 50 basis points.
Investor Verification Checklist
- Verify the final closing date and regulatory approval status of the Savvis acquisition.
- Confirm the actual net proceeds received versus the estimated $1.959 billion.
- Review the updated debt-to-equity ratio and interest coverage ratios post-issuance.
- Monitor the company's ability to service the new debt obligations alongside existing credit facility borrowings.
- Check for any subsequent filings regarding the integration of Savvis and associated costs.