Lumen Technologies’ subsidiary, Level 3 Financing, completed a $2.176 billion tender offer to repurchase its outstanding second‑lien notes, with the offer expiring at 5:00 p.m. EST on January 7, 2026. The transaction covered four series of second‑lien notes—4.000 % due 2031, 3.875 % due 2030, 4.500 % due 2030, and 4.875 % due 2029—resulting in the acceptance of approximately $2.176 billion of principal. An early settlement of $1.5 billion was completed on December 23, 2025, and the final settlement is scheduled for January 9, 2026.
The repurchase is part of Lumen’s broader effort to strengthen its balance sheet in preparation for the pending sale of its Mass Markets fiber business to AT&T. The AT&T transaction, announced in May 2025, is valued at $5.75 billion, is expected to close in the first half of 2026, and will transfer roughly 1 million fiber subscribers and 4 million fiber locations across 11 states. By retiring $2.176 billion of second‑lien debt, Lumen will reduce its net debt and improve leverage ratios, positioning the remaining enterprise‑focused business for a more attractive financial profile.
Prior to the tender offer, Lumen’s debt‑to‑equity ratio had been among the highest in the telecom sector, and its financial leverage peaked at 81.6× in December 2023. The $2.176 billion reduction brings the company closer to the 5.9× leverage level it reported at the end of Q3 2025, and is expected to lower annual interest expense by roughly $300 million. Credit rating agencies have noted the improvement in leverage, and the debt reduction is anticipated to support a more favorable outlook for Lumen’s credit profile.
Lumen’s leadership has underscored the strategic importance of the transaction. CEO Kate Johnson has highlighted the company’s focus on enterprise customers and its transformation into a leading digital enterprise networking company, noting that the debt reduction is a key step in strengthening the balance sheet for the upcoming AT&T divestiture and the broader shift toward high‑margin enterprise services.
Investors have responded positively to the debt reduction as part of Lumen’s broader transformation strategy. The transaction is viewed as a concrete move toward a leaner capital structure and a clearer focus on high‑growth enterprise segments, reinforcing confidence in the company’s long‑term turnaround plan.
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