Lumen (LUMN) Begins Consent Solicitation for TSA Transactions
Lumen Technologies LUMN recently announced that the company has begun a consent solicitation on Mar 8, 2024. The consent solicitation pertains to the amendment of certain indentures to enable the completion of the transactions contemplated by the previously announced (amended and restated) transaction support agreement (TSA).
Subject to the fulfilment of limited remaining closing conditions, Lumen is anticipating the completion of TSA transactions by the end of March 2024. Management is also “requesting” the creditors under the company's current term loans to agree to participate in certain transactions with respect to its credit agreements.
The company entered into a debt-restructuring agreement with a set of creditors holding $7 billion in debt in November 2023.
Again, in January 2024, Lumen entered into an amended and restated TSA with a wider group of creditors. The company, during fourth-quarter 2023 earnings results, highlighted that the restated agreement, which, when completed, will address maturities of $9 billion of debt (which includes more than 77% of debt maturing through 2027).
Lumen Technologies, Inc. Price and Consensus
Lumen Technologies, Inc. price-consensus-chart | Lumen Technologies, Inc. Quote
This TSA will extend debt maturities to 2029 and beyond. It will also extend $1.325 billion of financing through new long-term debt and offer access to a new revolving credit facility worth $1 billion.
Based in Monroe, LA, Lumen is an international facilities-based technology and communications company, which operates one of the most interconnected networks globally.
Lumen’s performance is gaining from continued momentum in cloud and colocation along with heavy investment in the Quantum fiber and enterprise business. Lumen added 20,000 Quantum fiber subscribers, taking the count to 916,000 at the end of the fourth quarter.
It is currently in the middle of a time-consuming business transformation initiative. Lumen is simplifying operations and as part of that, it recently completed the sale of its EMEA business and certain CDN contracts. Its highly leveraged balance sheet is a concern.
As of Dec 31, 2023, the company had $2.234 billion in cash and cash equivalents, with $19.831 billion of long-term debt compared with the respective figures of $311 million and $19.740 billion as of Sep 30, 2023. The closure of TSA agreement will aid Lumen to go ahead with its business transformation efforts.
Lumen currently sports a Zacks Rank #1 (Strong Buy).
Other Stocks to Consider
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The Zacks Consensus Estimate for Microsoft’s fiscal 2024 EPS is pegged at $11.63, indicating growth of 18.6% from the year-ago levels. Microsoft’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 8.8%. The long-term earnings growth rate is pegged at 16.2%. MSFT has gained 59.3% in the past year.
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