GLOBAL CROSSING LTD - FORM 8-K - EX-99.2 - PRESENTATION MATERIAL TO BE DISCUSSED

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8-K - FORM 8-K - GLOBAL CROSSING LTD	d8k.htm
EX-99.4 - GLOBAL CROSSING EMPLOYEE Q&A - GLOBAL CROSSING LTD	dex994.htm
EX-99.3 - FACT SHEET - GLOBAL CROSSING LTD	dex993.htm
EX-99.1 - JOINT PRESS RELEASE OF GLOBAL CROSSING LIMITED AND LEVEL 3 COMMUNICATIONS, INC. - GLOBAL CROSSING LTD	dex991.htm

Level 3 and Global Crossing

April 11, 2011

Exhibit 99.2

Agenda

Jim Crowe

CEO, Level 3

Transaction Structure

Tax-free, stock-for-stock exchange

Exchange Ratio

16 shares of Level 3 common stock for each share

of Global Crossing’s common and preferred stock

Pro Forma Ownership

57% Level 3 stockholders

43% Global Crossing stockholders

ST Telemedia

Largest shareholder of Global Crossing

Pro forma ownership approximately 25%;

standstill at 34.5%

Board of Director seats proportionate to stock

ownership

Transaction Value and

Multiples

$3.0 billion, including Global Crossing net debt of

$1.1 billion

7.1x 2010 Global Crossing Adjusted EBITDA;

4.2x including synergies

Transaction Summary

Estimated Synergies

NPV of expected synergies of $2.5 billion

$300 million of annualized Adjusted EBITDA

synergies and $40 million of annualized capital

expenditure synergies; once achieved

Financing

Level 3 Financing, Inc. has a $1.75 billion

financing commitment

Closing Conditions

Regulatory and other approvals; customary

closing conditions

Management Team

Chairman

CEO

CFO

Lead Integration Executive

Timing

Expected to close before year end

Transaction Summary

Walter Scott

Jim Crowe

Sunit Patel

Jeff Stroey

FY 2010 Key Metrics

Pro Forma

(1)

Post

Synergies

(2)

Revenue

$6.26B

Adj EBITDA

(3)

$1.27B

$1.57B

Cash Balance

$988M

Gross Debt/

Adj EBITDA

(3)

6.2x

5.0x

Net Debt/

Adj EBITDA

(3)

5.4x

4.4x

Geographical

Diversification

(4)

(5)

Balanced

Mix

Customers

(1)

Latin America

$597

12%

Europe

$939

18%

North America

$3,570

70%

Wholesale

$2,250

44%

Enterprise

$2,856

56%

($ in Millions)

(1)

Pro Forma balances represent the combined balances and results of Level 3 and

Global Crossing as of and for the year ended December 31, 2010

(2)

Post Synergies balances represent pro forma balances adjusted for estimated $300

million in network and operating expense synergies post-acquisition, once achieved

(3)

See schedule of non-GAAP metrics for definition and reconciliation to GAAP measures

Combined Company Overview

(4)

2010 Core Network Services plus Invest & Grow Revenue

(5)

Global Crossing Invest & Grow Revenue estimated by Region

Increased

scale

and

reach

the

combined

network

with

intercity

optical/IP

backbones and extensive metro facilities in North America, Europe and Latin

America

Improved service capability and cost structure enhance competitive position of the combined business

Approximately 100,000 intercity and 30,000 metro route miles on three continents, connected by an extensive global

subsea network

Delivering services to approximately 700 markets across 70 countries

End-to-end network provides customers with a high level of reliability and security

Extensive global service portfolio

Full portfolio of transport, data, content delivery, data center, colocation and voice services delivered to customers

globally

Global

Crossing

success

with

Virtual

Private

Network

services

powerful

addition

Level

3’s

enterprise

portfolio

Industry leading media delivery capability, including global Content Delivery Network services and video collection

and distribution services

Expanded addressable market

Level 3’s premier position with service providers and content customers combined with Global Crossing’s expertise

serving multinational corporations provides enhanced growth opportunities

Creates a unique global services platform anchored by extensive facilities-

based assets on three continents connected by undersea cables

Strategic Rationale

Acquisition creates substantial value for investors

Significant synergies create value

$2.5 billion NPV of expected synergies

$340 million of expected annualized Adjusted EBITDA and capital expenditure synergies through

elimination of duplicative network and operational costs, primarily in North America

Expect to achieve two-thirds of run-rate synergies within 18 months of closing

Provides strong improvement to balance sheet

Stock-based acquisition with substantial synergies provides significant deleveraging and credit

improvement

Level 3 debt to Adjusted EBITDA ratios improve immediately upon transaction closing, and further

improve as synergies are realized

Expected to be accretive to stockholders

Consolidated Free Cash Flow accretive on a per share basis in 2013

Over time, potential for substantial Pro Forma Free Cash Flow generation enables investment in value

accretive opportunities

Strategic Rationale

John Legere

CEO, Global Crossing

Power of the Combined Company

A services platform based on a world class set of assets

Multi-conduit, long-haul terrestrial; extensive submarine fiber networks

Metro networks with dense fiber connectivity

Data centers and colocation facilities on three continents

Content delivery technology and intellectual property rights

Level 3

Global Crossing

Jeff Storey

President and COO, Level 3

Transport &

Infrastructure

IP Data

Services

Voice &

Collaboration

Services

Colocation

Data Center &

Cloud

Services

CDN &

Broadcast

Services

North

America

Latin

America

Europe

Asia

World-class assets enable robust customer solutions

After closing, a full suite of customer solutions to capture addressable opportunities.

Robust product lines across the full product suite

Broad geographic availability of seamless, high performance customer solutions

Ability to address the complex requirements of integrated solutions

Development capability, intellectual property and resources to advance the product set

Expanding market opportunity

Strong fundamental demand trends in each market

Sales and service capability with superior market coverage globally

Supported by world class, scalable systems and processes

Customer experience-centric operating philosophy

Strong customer loyalties in each market

Expandable addressable market opportunity should help improve revenue growth

Carrier

Large and

Multinational

Enterprise

Mid-Market

Enterprise

Content

Government

North

America

Latin

America

Europe

Asia

Integration and Synergy Plan

Integration plan designed to:

Maintain excellent customer service at both

companies

Continue to accelerate revenue growth

Achieve planned synergies

Integration of intercity networks generally

presents less complex issues compared to

previous metro integrations

Joint integration team to develop and execute

a detailed plan

North America and European network focused

Synergy plan is based on milestones

CapEx

Synergies

12%

Note: Synergy percentages are estimates

NetEx

Synergies

39%

OpEx

Synergies

49%

Sunit Patel

CFO, Level 3

Synergies: Create Significant Value

Take advantage of Level 3’s existing asset base, cost structure and

metro access networks

Synergy amounts and timing should be achievable

Network and operating expense synergies represent less than 15% of Global

Crossing’s existing run-rate costs or 6% of combined company costs

Over two-thirds of expected operating and network expense run-rate synergies

expected to be achieved within 18 months of transaction close

Integration costs of approximately $200 to $225 million

NPV of Expected Synergies of $2.5 billion

2010

Level 3

Combined

Pro Forma

(1)

$ Millions

Stand Alone

Entity

w/Synergies

Revenue

$3,651

$6,260

Adjusted EBITDA

(3)

$853

$1,273

$1,573

Adj EBITDA Margin

23.4%

20.3%

25.1%

Capital Expenditures

(2)

$436

$659

$619

Cash Interest Expense

($522)

($677)

Free Cash Flow

(3)

($97)

($81)

$259

Debt Balance at 12/31

$6,448

$7,909

Cash Balance at 12/31

$616

$988

Gross Debt/Adj EBITDA

(3)

7.6x

6.2x

5.0x

Net Debt/Adj EBITDA

(3)

6.8x

5.4x

4.4x

Combined Company Financials

Both companies expected to

grow Revenue and Adjusted

EBITDA in 2011

Improved credit profile

Ability to reduce cash interest

expense substantially over

time

Net Debt to Adjusted EBITDA

improves from 6.8x to 4.4x

after synergies

Expected improvement in

Free Cash Flow generation

Flexibility to pursue high

return investments in metro,

Europe and Latin America

Continue to target leverage

ratio of 3x-5x

(1)

Pro Forma w/Synergies reflects $300M of network and operating expense synergies and

$40M of capital expenditure synergies

(2)

Capital expenditures include Global Crossing 2010 capital leases

(3)

See schedule of non-GAAP metrics for definition and reconciliation to GAAP measures

Summary

Combination creates a premier provider of communications services

meeting the local, national and global needs of enterprises, wholesale

buyers, content owners and governments

Expanded addressable market and service portfolio should help improve

revenue growth

Significant anticipated synergies create stockholder value

Improved credit profile improves financial flexibility

Improves Free Cash Flow generation; expected to be accretive on a Free

Cash Flow per share basis in 2013

Q&A

Important Information For Investors And Stockholders

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation

of any vote or approval. The proposed transaction will be submitted to the stockholders of Level 3 Communications, Inc.

(“Level 3”) and the stockholders of Global Crossing Limited (“Global Crossing”) for their consideration. Level 3 and Global

Crossing will file a registration statement on Form S-4, a joint proxy statement/prospectus and other relevant documents

concerning the proposed transaction with the SEC. Level 3 and Global Crossing will each provide the final joint proxy

statement/prospectus to its respective stockholders. Investors and security holders are urged to read the registration

statement and the joint proxy statement/prospectus and any other relevant documents filed with the SEC when they

become available, as well as any amendments or supplements to those documents, because they will contain important

information about Level 3, Global Crossing and the proposed transaction. Investors and security holders will be able to

obtain a free copy of the registration statement and joint proxy statement/prospectus, as well as other filings containing

information about Level 3 and Global Crossing free of charge at the SEC’s Web Site at http://www.sec.gov. In addition,

the joint proxy statement/prospectus, the SEC filings that will be incorporated by reference in the joint proxy

statement/prospectus and the other documents filed with the SEC by Level 3 may be obtained free of charge by directing

such request to: Investor Relations, Level 3, Inc., 1025 Eldorado Boulevard, Broomfield, Colorado 80021 or from Level

3’s Investor Relations page on its corporate website at http://www.level3.com and the joint proxy statement/prospectus,

the SEC filings that will be incorporated by reference in the joint proxy statement/prospectus and the other documents

filed with the SEC by Global Crossing be obtained free of charge by directing such request to: Global Crossing by

telephone at (800) 836-0342 or by submitting a request by e-mail to glbc@globalcrossing.com or a written request to the

Secretary, Wessex House, 45 Reid Street, Hamilton HM12 Bermuda or from Global Crossing’s Investor Relations page

on its corporate website at http://www.globalcrossing.com.

Level 3, Global Crossing and their respective directors, executive officers, and certain other members of management and

employees may be deemed to be participants in the solicitation of proxies in favor of the proposed transactions from the

stockholders of Level 3 and from the stockholders of Global Crossing, respectively. Information about the directors and

executive officers of Level 3 is set forth in the proxy statement on Schedule 14A for Level 3’s 2011 Annual Meeting of

Stockholders, which was filed with the SEC on April 4, 2011 and information about the directors and executive officers of

Global Crossing is set forth in the proxy statement for Global Crossing’s 2010 Annual Meeting of Stockholders, which was

filed with the SEC on May 19, 2010. Additional information regarding participants in the proxy solicitation may be obtained

by reading the joint proxy statement/prospectus regarding the proposed transaction when it becomes available.

Cautionary Notice Regarding Forward-Looking Statements

This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of

1995. These forward-looking statements include, but are not limited to, (i) statements about the benefits of the acquisition of

Global Crossing by Level 3, including financial and operating results and synergy benefits that may be realized from the

acquisition and the timeframe for realizing those benefits; Level 3's and Global Crossing's plans, objectives, expectations and

intentions and other statements contained in this communication that are not historical facts; and (ii) other statements

identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” or words of similar

meaning.

These forward-looking statements are based upon management's current beliefs or expectations and are inherently subject

to significant business, economic and competitive uncertainties and contingencies and third-party approvals, many of which

are beyond our control. The following factors, among others, could cause actual results to differ materially from those

expressed or implied in the forward-looking statements: (1) the occurrence of any event, change or other circumstances that

could give rise to the termination of the Agreement and Plan of Amalgamation among Level 3, Global Crossing and Global

Crossing Amalgamation Sub, Ltd. (the “Amalgamation Agreement”); (2) the inability to complete the transactions

contemplated by the Amalgamation Agreement due to the failure to obtain the required stockholder approvals, (3) the inability

to satisfy the other conditions specified in the Amalgamation Agreement, including without limitation the receipt of necessary

governmental or regulatory approvals required to complete the transactions contemplated by the Amalgamation Agreement.

(4) the inability to successfully integrate the businesses of Level 3 and Global Crossing or to integrate the businesses within

the anticipated timeframe; (5) the risk that the proposed transactions disrupt current plans and operations, increase operating

costs and the potential difficulties in customer loss and employee retention as a result of the announcement and

consummation of such transactions; (6) the ability to recognize the anticipated benefits of the combination of Level 3 and

Global Crossing, including the realization of revenue and cost synergy benefits and to recognize such benefits within the

anticipated timeframe; (7) the outcome of any legal proceedings that may be instituted against Level 3, Global Crossing or

others following announcement of the Amalgamation Agreement and transactions contemplated therein; and (8) the

possibility that Level 3 or Global Crossing may be adversely affected by other economic, business, and/or competitive

factors.

Cautionary Notice Regarding Forward-Looking Statements

Other important factors that may affect Level 3's and the combined business' results of operations and financial condition

include, but are not limited to: the current uncertainty in the global financial markets and the global economy; a

discontinuation of the development and expansion of the Internet as a communications medium and marketplace for the

distribution and consumption of data and video; disruptions in the financial markets that could affect Level 3’s ability to

obtain additional financing, and the company’s ability to: increase and maintain the volume of traffic on its network;

develop effective business support systems; manage system and network failures or disruptions; develop new services

that meet customer demands and generate acceptable margins; defend intellectual property and proprietary rights; adapt

to rapid technological changes that lead to further competition; attract and retain qualified management and other

personnel; successfully integrate acquisitions; and meet all of the terms and conditions of debt obligations.

Additional information concerning these and other important factors can be found within Level 3’s and Global Crossing’s

respective filings with the SEC, which discuss the foregoing risks as well as other important risk factors that could

contribute to such differences or otherwise affect our business, results of operations and financial condition. Statements in

this communication should be evaluated in light of these important factors. The forward-looking statements in this

communication speak only as of the date they are made. Except for the ongoing obligations of Level 3 and Global

Crossing to disclose material information under the federal securities laws, neither Level 3 nor Global Crossing

undertakes any obligation to, and expressly disclaim any such obligation to, update or alter any forward-looking statement

to reflect new information, circumstances or events that occur after the date such forward-looking statement is made

unless required by law.

Non-GAAP Reconciliation

Pursuant to Regulation G, the company is hereby providing a reconciliation of non-GAAP financial metrics to the

most directly comparable GAAP measure.

The following describes and reconciles those financial measures as reported under accounting principles generally

accepted in the United States (GAAP) with those financial measures as adjusted by the items detailed below and

presented in the accompanying news release. These calculations are not prepared in accordance with GAAP and

should not be viewed as alternatives to GAAP. In keeping with its historical financial reporting practices, the

company believes that the supplemental presentation of these calculations provides meaningful non-GAAP financial

measures to help investors understand and compare business trends among different reporting periods on a

consistent basis, independently of regularly reported non-cash charges and infrequent or unusual events.

Management believes that Adjusted EBITDA and Adjusted EBITDA plus Estimated Synergies are relevant and

useful

metrics

provide

investors,

they

are

important

part

the

company’s

internal

reporting

and

are

key

measures used by Management to evaluate profitability and operating performance of the company and to make

resource allocation decisions. Management believes such measures are especially important in a capital-intensive

industry such as telecommunications. Management also uses Adjusted EBITDA and Adjusted EBITDA plus

Estimated Synergies to compare the company’s performance to that of its competitors and to eliminate certain non-

cash and non-operating items in order to consistently measure from period to period its ability to fund capital

expenditures, fund growth, service debt and determine bonuses. Adjusted EBITDA excludes non-cash impairment

charges and non-cash stock compensation expense because of the non-cash nature of these items. Adjusted

EBITDA also excludes interest income, interest expense and income taxes because these items are associated with

the company’s capitalization and tax structures. Adjusted EBITDA also excludes depreciation and amortization

expense because these non-cash expenses reflect the impact of capital investments which management believes

should be evaluated through free cash flow. Adjusted EBITDA excludes the gain (or loss) on extinguishment of debt

and other, net because these items are not related to the primary operations of the company.

Schedule to Reconcile to Non-GAAP Financial Metrics

There are limitations to using non-GAAP financial measures, including the difficulty associated with comparing

companies that use similar performance measures whose calculations may differ from the company’s calculations.

Additionally, this financial measure does not include certain significant items such as interest income, interest

expense, income taxes, depreciation and amortization, non-cash impairment charges, non-cash stock

compensation expense, the gain (or loss) on extinguishment of debt and net other income (expense). Adjusted

EBITDA and Adjusted EBITDA plus Estimated Synergies should not be considered a substitute for other measures

of financial performance reported in accordance with GAAP.

Schedule to Reconcile to Non-GAAP Financial Metrics

Combined

Total

Revenue

defined

combined

total

revenue

from

the

Consolidated

Statements

of Operations as

filed in each company’s Annual Report on Form 10-K for the year ended December 31, 2010.

Communications

Revenue

defined

communications

revenue

from

Level

Communications’

Consolidated

Statements of Operations.

Adjusted EBITDA

is defined as net income (loss) from the Consolidated Statements of Operations before income

taxes, total other income (expense), non-cash impairment charges, depreciation and amortization and non-cash

stock compensation expense.

Adjusted

EBITDA

plus

Estimated

Synergies

defined

Adjusted

EBITDA

plus

the

estimated

synergies resulting

from the combination.

Total Debt,

including

Capital

Leases

defined

the

current

and

long-term

portions

debt

and

obligations under

capital leases as reported in the Consolidated Balance Sheets filed in each company’s Annual Report on Form 10-K

for the year ended December 31, 2010.

Cash and

Cash

Equivalents

defined

the

total

cash

and

cash

equivalents

reported

component of current

assets in the Consolidated Balance Sheets as filed in each company’s Annual Report on Form 10-K for the year

ended December 31, 2010.

Debt

Adjusted

EBITDA

Ratio

defined

Total

Debt,

including

Capital

Leases

divided

Adjusted

EBITDA.

Net

Debt

Adjusted

EBITDA

Ratio

defined

Total

Debt,

including

Capital

Leases

reduced

the

Cash and

Cash Equivalents, divided by Adjusted EBITDA.

Schedule to Reconcile to Non-GAAP Financial Metrics

Free Cash Flow

defined

net

cash

provided

(used

in)

operating

activities

less

capital

expenditures

disclosed in the Consolidated Statements of Cash Flows in each company’s Annual Report on Form 10-K for the

year

ended

December

31,

2010.

Management

believes

that

Free

Cash

Flow

and

Free

Cash

Flow

plus

Estimated

Synergies

are

relevant

metrics

provide

investors,

indicator

the

company’s

ability

generate

cash to service its debt. Free Cash Flow excludes cash used for acquisitions and principal repayments.

There are material limitations to using Free Cash Flow to measure the company against some of its competitors

Level

does

not

currently

pay

significant

amount

income

taxes

due

net

operating

losses,

and

therefore,

generates

higher

cash

flow

than

comparable

business

that

does

pay

income

taxes.

Additionally,

this

financial

measure

subject

variability

quarter

over

quarter

result

the

timing

receipts

payments

related to accounts receivable and accounts payable and capital expenditures. This financial measure should not

be used as a substitute for net change in cash and cash equivalents on the Consolidated Statements of Cash

Flows.

Schedule to Reconcile to Non-GAAP Financial Metrics

Schedule to Reconcile Non-GAAP Financial Metrics

Combined Revenue

($ in millions)

Level 3

Communications

Global Crossing

Combined

Revenue:

Communications

$3,591

$2,609

$6,200

Coal

Total Revenue

$3,651

$2,609

$6,260

Year Ended December 31, 2010

Schedule to Reconcile Non-GAAP Financial Metrics

Adjusted EBITDA Metrics

Global Crossing

($ in millions)

Communications

Other

Consolidated

Combined

Net Loss applicable to common shareholders

($617)

($5)

($622)

($176)

($798)

Preferred Stock Dividends

Income Tax Benefit

(91)

(5)

(96)

Total Other (Income) Expense

620

623

240

863

Depreciation and Amortization

870

876

337

1,213

Non-cash Stock Compensation

Adjusted EBITDA

$849

$853

$420

$1,273

Estimated Synergies

$300

Adjusted EBITDA plus Estimated Synergies

$1,573

Year Ended December 31, 2010

Level 3 Communications

Schedule to Reconcile Non-GAAP Financial Metrics

Adjusted EBITDA Ratios

($ in millions)

Level 3

Communications

Global Crossing

Combined

Combined with

Synergies

Total Debt, including capital leases

$6,448

$1,461

$7,909

Cash and cash equivalents

616

372

988

Net Debt

$5,832

$1,089

$6,921

Adjusted EBITDA

$853

$420

$1,273

$1,573

Debt to Adjusted EBITDA Ratio

7.56

3.48

6.21

5.03

Net Debt to Adjusted EBITDA Ratio

6.84

2.59

5.44

4.40

Year Ended December 31, 2010

Schedule to Reconcile Non-GAAP Financial Metrics

Free Cash Flow

($ in millions)

Level 3

Communications

Global Crossing

Combined

Combined with

Synergies

Net Cash Provided by Operating Activities

$339

$183

$522

$822

Capital Expenditures

(436)

(167)

(603)

(563)

Free Cash Flow

($97)

$16

($81)

$259

Year Ended December 31, 2010

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