Level 3 Raises an Additional $400 Million. Will that be enough?

Level 3 Communications in Broomfield has long been one of the only major telecommunications carriers not to file bankruptcy. If you are a company like, Level 3, money is very hard to come by these days and the money that is available is very expensive. The Rocky Mountain News reports that in an attempt to mitigate 2009 and 2010 cash issues, the company has borrowed an additional $400M from it's stockholders. As I said, it does not come cheap, they will pay a staggering 15% annual interest rate.

Fifteen percent on $400M on it's face seems like blood money. But if the cash well runs dry, Level 3 might have to pay double. If they use it and can't pay it back, this will most likely lead to bankruptcy and the interest rate is a moot point. Either way, I see no way Level 3 can't borrow this money.

A major challenge is they will need to keep sales up just to make this $400M do anything for them, if not their share holders are going to get very uneasy. Doing this in a competitive telecommunications industry is much easier said than done.

Any way you slice it, Level 3 might have too much debt, at some point in 2009 we might see them try and restructure it. It might be inevitable.