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November 28, 2002 — (WEB HOST INDUSTRY REVIEW) — Level 3 Communications, Inc. and Genuity Inc announced that they have signed a definitive agreement under which Level 3 will acquire substantially all of
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the assets of the Massachusetts-based communications company.
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Level 3 will pay up to $242 million in cash and assume a significant portion
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of existing long-term operating agreements to acquire Genuity’s assets and
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operations. To facilitate the transaction, Genuity is filing voluntary
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petitions for reorganization under Chapter 11 of the Bankruptcy Code. Level
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3′s cash consideration at closing could be reduced subject to certain
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material adjustments.
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This transaction represents the best outcome for the key constituencies of
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both Genuity and Level 3,” said Paul R. Gudonis, chairman and chief
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executive officer of Genuity. “Both companies, as well as Genuity’s largest
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customers and creditors, have signed agreements supporting the transaction.
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“We’re particularly pleased that all of the key parties have come together
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in support of this acquisition. For Genuity’s customers, the transaction
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will result in a stronger, financially sound, operationally reliable
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provider of communications services. For Genuity’s business partners, the
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agreement will help ensure business relationships continue with the least
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possible disruption. And for employees, this transaction offers the maximum
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possible opportunity for the greatest number of people. ”
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Level 3 and Genuity were reported to have agreed on a ‘pre-packaged’
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bankruptcy filing by Genuity predicated on Level 3 assuming control of the
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company after its re-emergence from bankruptcy. Other bidders could step up
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after Genuity files for Chapter 11 protection.
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Genuity operates a 17,500-mile global fiber-optic network, Black Rocket Web
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hosting and data services centers, and dial-up Internet facilities for
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America Online and other Internet service providers.
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Genuity was formerly GTE’s Internetworking division. GTE and Bell Atlantic
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were required to divest control of Genuity as part of their July 2000 merger
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that created Verizon. Genuity went public in a $1.9 billion initial public
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offering and its shares never again hit their IPO price of $220 in June
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2000. At yesterday’s close the company had a market capitalization of just
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$5.25 million.
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