Lumen CFO Says Firm Will Focus on Stabilizing After Debt Deal

Lumen Technologies Inc. plans to focus on stabilizing its business after finalizing a restructuring deal with creditors that slashes its debt, its finance chief said.

The agreement, released Friday, reduces the telecommunications firm’s debt due in 2025 and 2026 by around $1.5 billion, and cuts its obligations due in 2027 by over $8.5 billion.

The company received a new $1 billion revolving credit facility as well as $1.325 billion in new senior secured notes due in 2029 as part of the deal.

“It signals confidence in our business and progress. Our capital structure is no longer restraining us,” Chief Financial Officer Chris Stansbury said in an interview.

Finalizing the agreement took time, Stansbury said, adding that “working through all of the documentation was a tremendous effort.” The company and its creditors in December agreed to push back the deadline to close the restructuring, Bloomberg News reported at the time. The proposed deal drew ire from investors who had been left out of the transaction, and the company ultimately expanded it to include more creditors.

A series of acquisitions left Lumen saddled with about $20 billion in debt, more than half of which was set to mature in the coming years. Having that much debt was hurting the business, Stansbury said.

“The cloud that hung over us with the $10 billion in debt was an issue for our customers. It was impacting our sales motion,” he said.

Under the agreement, Lumen has about $600 million of obligations due in 2025 and 2026, as well as approximately $800 million for 2027. Holders of more than 94% of Lumen’s term loans participated in the deal, which was higher than expected, according to Stansbury.

Lumen has the capacity to do follow-on transactions with the holders of outstanding term loan debt, he said. “If there is a small ownership, we can go to maturity and pay them then,” he said.

The company plans to keep working on its capital structure, the CFO said, adding that “we are not done.”

Lumen will focus on stabilizing and growing revenue and earnings before interest, tax, depreciation and amortization this year and next and provide updated financial guidance during the second half of the year, Stansbury said.

Lumen reported a net loss of $10.3 billion for 2023, driven by $10.7 billion of writedowns, compared with a net loss of $1.55 billion in 2022. It generated total revenue of $14.6 billion in 2023, down from $17.5 billion in 2022.

Formerly known as CenturyLink, Lumen acquired Qwest Communications in 2011 and bought Level 3 Communications in 2017. Bloomberg 

March 23, 2024