Lumen Technologies’ wholly‑owned subsidiary, Level 3 Financing, Inc., issued $750 million of senior notes due 2036 and simultaneously launched tender offers to buy back up to $1 billion of its existing second‑lien notes. The new notes provide a lower‑cost financing vehicle, while the tender offers accelerate the payoff of higher‑cost debt that has been a drag on the company’s balance sheet.
The tender offers give holders of the four series of second‑lien notes—4.000% due 2031, 3.875% due 2030, 4.500% due 2030, and 4.875% due 2029—a premium of $30 per $1,000 principal. Total consideration ranges from $885 to $985 per $1,000, depending on the series. The early‑tender premium and the varying consideration levels reflect the differing coupon rates and maturities of the notes, allowing Lumen to retire debt at a price that balances market conditions with its debt‑reduction goals.
The company will use the net proceeds from the note issuance, along with any cash on hand, to pay the tender‑offer premiums, cover related fees, and reduce its overall debt burden. The transaction is part of a broader strategy that includes the pending sale of Lumen’s Mass Markets fiber business to AT&T, which is expected to close in the first half of 2026 and will eliminate $4.8 billion of super‑priority debt. By removing the higher‑cost second‑lien debt and the AT&T proceeds, Lumen aims to lower interest expense, improve its debt‑to‑capital ratio, and free capital for investment in its private connectivity fabric and network‑as‑a‑service platforms that underpin its shift to high‑margin AI infrastructure.
Lumen’s Q3 2025 results provide context for the financing move. The company posted a net loss of $621 million, a decline from the $148 million loss in Q3 2024, and adjusted EBITDA of $787 million, down from $899 million year‑over‑year. Revenue fell to $3.087 billion, a 4.3% decline from $3.221 billion in Q3 2024, and the adjusted EBITDA margin contracted to 25.5% from 28.8%. CEO Kate Johnson highlighted disciplined execution and bold ambition, noting that the company’s investments in private connectivity and AI are “opening new doors” and that the organization is “building the backbone of the AI economy.” The results illustrate the tension between growth investments and profitability pressures, underscoring why debt reduction is a priority.
Investors have reacted to the financing and earnings data with a focus on revenue decline and the widening net loss, which have tempered enthusiasm for the debt‑reduction narrative. Nonetheless, the ability to retire high‑cost debt and the strategic alignment with the AT&T sale are viewed as positive steps toward a leaner balance sheet and a clearer path to profitability in the AI‑centric business model.
In sum, Lumen’s senior‑note issuance and tender offers represent a decisive move to strengthen its capital structure and support its transition to a high‑margin AI infrastructure provider. While short‑term profitability remains challenged by declining revenue and net losses, the debt‑reduction strategy positions the company to invest more aggressively in its core growth areas and to emerge from the AT&T transaction with a more sustainable financial profile.
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