- Wednesday, October 16, 2024
Lumen Technologies Inc. has faced significant challenges in recent years, leading to a decline in its stock price and cash flow issues. However, the telecommunications company received a boost on Thursday when it announced a new agreement with creditors that would provide "significant financial flexibility."
The amended transaction support agreement (TSA) has been entered into with creditors who hold over $12.5 billion of Lumen's outstanding debt and commitments. This group also represents more than 70% of the debt maturing through 2027 for both Lumen and Level 3, a business acquired by Lumen in 2017.
Under the agreement, the maturity of the debt will mainly extend to 2029 and beyond. In addition, Lumen will receive $1.325 billion of financing through new long-term debt and gain access to a new revolving credit facility of approximately $1 billion.
CEO Kate Johnson expressed her optimism about the agreement, stating, "This agreement represents another positive step forward in the Lumen turnaround story and creates substantial runway for the company to achieve its financial and capital-structure goals."
Following the announcement, Lumen's shares experienced a significant increase of over 17% in morning trading on Thursday. It is worth noting, however, that the stock remains considerably down by 86% over a two-year period.
During a Bank of America conference in November, CFO Chris Stansbury acknowledged the concerns surrounding Lumen's "debt tower of 2027." The market had questioned whether the company's turnaround plans would even matter given the size of its debt. Therefore, Lumen's decision to restructure its debt highlights its determination to address these concerns.
All Rights Reserved © 2024
Post a comment