Attachment Level 3 Agreement.pd

Level 3 Agreement.pd

SUPPLEMENT

Supplement

2011-09-27

This document pretains to SCL-T/C-20110512-00016 for Transfer of Control on a Submarine Cable Landing filing.

IBFS_SCLTC2011051200016_918733

                                    Before the
                       FEDERAL COMMUNICATIONS COMMISSION
                                  Washington, D.C.


In the Matter of

LEVEL 3 COMMUNICATIONS, INC.                          IB Docket No. 11-78

Petition for Declaratory Ruling Under Section         File No. ISP-PDR-2011-____
310(b)(4) of the Communications Act of 1934,
as Amended



                         PETITION FOR DECLARATORY RULING

       Pursuant to 47 U.S.C. § 310(b)(4) (“Section 310(b)(4)”) and the Commission’s

implementing rules and policies therefor, Level 3 Communications, Inc. (“Level 3 Parent”)

(FRN 0005868732), hereby petitions the Commission for a declaratory ruling that it would serve

the public interest to permit the direct foreign ownership of Level 3 Parent, and thus the indirect

foreign ownership of Level 3 Parent’s Title III-licensed subsidiaries TelCove FWL, Inc.

(“TelCove”) (FRN 0014359079), and Vyvx, LLC (“Vyvx”) (FRN 0010597771), in excess of the

25-percent foreign-ownership benchmark in Section 310(b)(4). TelCove holds 193 Local

Multipoint Distribution Service (“LMDS”) licenses and 177 39 GHz licenses. Vyvx holds

fifteen common-carrier satellite earth station authorizations.

       Level 3 Parent has entered into an agreement to acquire Global Crossing Limited

(“GCL”) through an amalgamation under Bermuda law, a transaction that will return GCL and

its subsidiaries to U.S. management control and predominantly U.S. ownership at closing (the

“Proposed Transaction”). GCL is currently indirectly majority-owned and controlled by

Singapore Technologies Telemedia Pte Ltd (“ST Telemedia”). ST Telemedia, a Singapore

investment holding company, indirectly holds a majority interest in GCL of approximately 59.9


percent. As consideration for the Proposed Transaction, GCL’s existing shareholders—including

ST Telemedia’s wholly-owned subsidiary, STT Crossing Ltd (“STT Crossing”)—will receive

stock in Level 3 Parent in exchange for cancellation of their GCL shares, thereby decreasing the

foreign ownership in GCL’s operating subsidiaries but increasing the aggregate indirect foreign

ownership of TelCove and Vyvx.

       Level 3 Parent therefore petitions the Commission for a declaratory ruling allowing

aggregate indirect foreign ownership in TelCove and Vyvx in excess of 25 percent—specifically,

46.11 percent at closing, consisting of: (i) an approximate 24.47-percent indirect equity-and-

voting interest to be acquired by STT Crossing (a foreign investor from Singapore, a World

Trade Organization (“WTO”) Member country), (ii) an aggregate approximate 11.42-percent

indirect equity-and-voting interests that are held or will be acquired by other investors from

WTO Member countries, and (iii) an aggregate approximate 10.22 percent indirect equity-and-

voting interests to be acquired by retail investors of unknown nationality (and one known

investor arguably from a non-WTO Member country).1

       Level 3 Parent also requests that, consistent with Commission precedent, the Commission

permit Level 3 Parent to accept an additional aggregate 25-percent indirect equity and/or voting

interests from foreign investors without seeking prior Commission approval under Section

310(b)(4). This additional aggregate 25-percent interest would consist of (i) potential additional

ownership by ST Telemedia (through STT Crossing) up to 34.5 percent (i.e., up to an additional

10.03 percent interest), consistent with the limitations under a Stockholder Rights Agreement by


1
    Concurrently with this petition, Level 3 and its subsidiaries and GCL and its subsidiaries
    have filed applications to transfer control of: (1) transmit-receive non-common carrier
    satellite earth station authorizations held by Global Crossing Americas Solutions, Inc.
    (“GCAS”); (2) cable landing licenses held by GT Landing II Corp. and GCAS; and (3)
    domestic and international Section 214 authorizations held by various GCL subsidiaries.


                                                 2


and between Level 3 Parent and STT Crossing, and (ii) potential ownership by other foreign

investors accounting for the remaining balance (i.e., 14.97 percent). This margin would also

accommodate potential fluctuations in ownership in publicly traded Level 3 Parent stock. Level

3 Parent requests that the Commission accept this additional aggregate foreign ownership

provided that (1) no more than 25 percent of Level 3 Parent’s total ownership is attributable to

entities from non-WTO countries and/or (2) no more than 25 percent is attributable to a single

previously unidentified entity from a WTO Member country.2

          For the reasons set forth below, the Commission should grant the requested declaratory

ruling.

I.        BACKGROUND

          A.     Parties to the Proposed Transaction

                 1.     GCL

          GCL is a global telecommunications company. It is organized as a Bermuda exempted

limited-liability company with its principal executive offices in Hamilton, Bermuda, and its

principal administrative offices in Florham Park, New Jersey. GCL is a publicly-traded

company listed on NASDAQ (symbol: GLBC). Through its subsidiaries, GCL owns and

operates a global Internet Protocol (“IP”)-based fiber optic network directly connecting more

than 300 cities in 30 countries. GCL uses this network to provide telecommunications services

and data and IP-based services to corporations, government agencies, and telecommunications

carriers. GCL’s U.S. operating subsidiaries hold numerous Commission authorizations for

international telecommunications services, undersea cable facilities, and non-common-carrier



2
     See, e.g., Robert M. Franklin, Transferor Inmarsat, Plc, Transferee, Memorandum Opinion
     and Order and Declaratory Ruling, 24 FCC Rcd. 449, 480 ¶ 70 (Int’l Bur. 2009); TelCove,
     Inc., Order and Declaratory Ruling, 21 FCC Rcd. 3982, 3984 ¶ 3 (Int’l Bur. 2006).


                                                  3


satellite earth stations, and some of them rely on blanket authority to provide domestic

telecommunications services.3 GCL is currently majority-owned and controlled by ST

Telemedia. As described below, following the consummation of the Proposed Transaction, GCL

will be amalgamated with Level 3 Parent’s special-purpose subsidiary, Apollo Amalgamation

Sub, Ltd. (“Amalgamation Sub”), and continue as Level 3 GC Limited, itself a wholly-owned,

direct subsidiary of Level 3 Parent.

               2.       ST Telemedia

       ST Telemedia is a Singapore investment holding company, with investments in various

information communications companies. It is organized as a private limited company under the

laws of the Republic of Singapore. Following receipt of U.S. Government and other approvals,

including Commission consents, ST Telemedia acquired control of GCL in December 2003.4

Through STT Crossing and another intermediate holding company, ST Telemedia indirectly

holds a majority interest in GCL of approximately 59.9 percent, via 29,342,431 shares of GCL

common stock and 18,000,000 shares of convertible preferred stock.5 ST Telemedia is wholly

owned by Temasek Holdings (Private) Limited (“Temasek”), a Singapore-based investment

holding company which in turn is wholly owned by the Government of Singapore through the

Minister for Finance.


3
    GCL’s operating subsidiaries no longer hold any Commission wireless licenses.
4
    Global Crossing Ltd. (Debtor in Possession), Transferor, and GC Acquisition Limited,
    Transferee, Applications for Consent to Transfer Control of Various FCC Licenses, Order
    and Authorization, 18 FCC Rcd. 20,301, 20,346-47 (IB, WCB, and WTB 2003) (“GCL
    Transfer Order”); see also International Authorizations Granted, Public Notice, 22 FCC
    Rcd. 12,888, 12,889 (2007) (approving increase in ST Telemedia’s indirect ownership from
    61.5 percent as authorized in the GCL Transfer Order to 66.25 percent).
5
    GCL preferred stock converts on a 1:1 basis to GCL common stock and votes on an as-
    converted basis with GCL common stock. GCL preferred stock has class voting rights only
    with respect to amendments to the terms of the preferred stock.


                                                4


               3.     STT Crossing

       STT Crossing is a holding company organized as a Mauritius private limited company.

At present, STT Crossing holds a majority interest in GCL of approximately 59.9 percent.

Following the consummation of the Proposed Transaction, STT Crossing will become a minority

shareholder of Level 3 Parent. STT Crossing has entered into a Stockholder Rights Agreement

with Level 3 Parent (specifying its rights and capping the percentage of shares it may own

without the written consent of Level 3 Parent’s board of directors) and a voting agreement

(whereby STT Crossing agrees to vote in favor of the amalgamation of GCL and Amalgamation

Sub as contemplated in the Amalgamation Agreement).

               4.     Level 3 Parent

       Level 3 Parent is a global telecommunications and information services company. It is a

Delaware corporation headquartered in Broomfield, Colorado. Through its operating

subsidiaries, Level 3 Parent offers a wide range of communications services over its extensive

broadband fiber-optic network in North America, Europe, and Asia, including IP-based services,

broadband transport, collocation services, and patented Softswitch-based managed modem and

voice services. Level 3 Parent is a publicly-traded company listed on NASDAQ (symbol:

LVLT). It has issued a single class of voting stock.

               5.     Amalgamation Sub

       Amalgamation Sub is a Bermuda exempted limited-liability company established by

Level 3 for the purpose of amalgamating with GCL. It has no operations and owns no

infrastructure. Amalgamation Sub is a wholly-owned, direct subsidiary of Level 3 Parent.

Following the consummation of the Proposed Transaction, Amalgamation Sub will be

amalgamated with GCL into Level 3 GC Limited, itself a wholly-owned, direct subsidiary of

Level 3 Parent.


                                                5


                  6.    Level 3 GC Limited

       Level 3 GC Limited will be a Bermuda exempted limited-liability company established

as a consequence of the amalgamation of GCL and Amalgamation Sub. The assets and liabilities

of GCL and Amalgamation Sub—as described above—will become those of Level 3 GC

Limited.

                  7.    TelCove

       TelCove is a Delaware corporation and is a wholly-owned, indirect subsidiary of Level 3

Parent. TelCove is a holding company through which Level 3 Parent holds 193 LMDS licenses

and 177 39 GHz licenses. None of these licenses have been built out.

                  8.    Vyvx

       Vyvx is a Delaware limited-liability company and is a wholly-owned, indirect subsidiary

of Level 3 Parent. Vyvx provides interstate interexchange and international media transmission

services. Through Vyvx, Level 3 Parent holds fifteen common-carrier satellite earth station

authorizations.

       B.         The Proposed Transaction

       On April 10, 2011, GCL, Level 3 Parent, and Amalgamation Sub executed an Agreement

and Plan of Amalgamation (“Amalgamation Agreement”) whereby GCL and Amalgamation Sub

will, following the receipt of necessary stockholder and regulatory approvals, amalgamate

pursuant to the Companies Act 1981 of Bermuda (“Companies Act”) and continue their

existence as a single company, to be known as Level 3 GC Limited. An amalgamation under

Bermuda law differs from a merger under the corporate laws of a U.S. state (e.g., Delaware) in

that there is no surviving corporation. Instead, the assets and liabilities of the amalgamating

companies (here, GCL and Amalgamation Sub) become those of the amalgamated company




                                                 6


(here, Level 3 GC Limited), and the certificate of amalgamation is equivalent to the certificate of

incorporation of the amalgamated entity.

       Pursuant to the Amalgamation Agreement, all GCL common shares and convertible

preferred shares (excluding shares held by dissenting shareholders) will be cancelled and cease

to exist. As consideration, existing shareholders of GCL (excluding dissenting shareholders) will

receive shares in Level 3 Parent from an Exchange Fund established pursuant to the

Amalgamation Agreement, with each GCL common or convertible preferred share to be

exchanged for sixteen shares of Level 3 Parent common stock. The shares of dissenting

shareholders will be cancelled, and dissenting shareholders will receive the right to payment of

fair value pursuant to the Companies Act. As a consequence of the Proposed Transaction,

Level 3 GC Limited will be a wholly-owned, direct subsidiary of Level 3 Parent.

       As a result of the Amalgamation Agreement, ST Telemedia, through STT Crossing, will

acquire 757,478,896 shares of Level 3 Parent common stock in exchange for 29,342,431 shares

of GCL common stock and 18,000,000 shares of GCL convertible preferred stock. The shares of

Level 3 Parent’s common stock being issued to STT Crossing represent approximately 24.47

percent of Level 3 Parent’s issued and outstanding shares of common stock following the closing

of the Proposed Transaction.

       A Stockholder Rights Agreement by and between Level 3 Parent and STT Crossing,

executed simultaneously with the Amalgamation Agreement, limits ST Telemedia’s ability to

make any share acquisitions unless, after giving effect to such share acquisitions, ST

Telemedia’s interest in Level 3 Parent is less than 34.5 percent absent written consent by a

majority of Level 3 Parent’s board of directors (excluding directors designated by STT

Crossing). The Stockholder Rights Agreement also grants to STT Crossing the right to designate




                                                 7


a set number of directors on Level 3 Parent’s board of directors as of closing, depending on the

overall size of the board at closing. STT Crossing will have the right to designate 3 directors for

a board of 13 or fewer members, 4 directors for a board of 14 to 16 members, and 5 directors for

a board of 17 or more members. Thereafter, STT Crossing has the right to nominate such

number of designees to the board that is proportionate to its shareholding in Level 3 Parent. By

contrast, STT Crossing currently has the right to appoint 8 of the 10 directors on GCL’s board.

II.      CHANGES IN OWNERSHIP AS A CONSEQUENCE OF THE PROPOSED
         TRANSACTION

         The Proposed Transaction will have the effect of diluting the current ownership of Level

3 Parent, resulting in Level 3 Parent’s existing shareholders owning approximately 55.22 percent

of the shares of the post-consummation Level 3 Parent, and GCL’s existing shareholders owning

approximately 44.78 percent of the shares of the post-consummation Level 3 Parent.

         In determining whether foreign investors are based in WTO Member countries, the

Commission undertakes an analysis of the investor’s principal place of business to determine the

nationality or “home market” of that entity.6 That analysis considers five factors: (1) the

country of the investor’s incorporation, organization, or charter; (2) the nationality of all

investment principals, officers, and directors; (3) the country in which its world headquarters is

located; (4) the country in which the majority of its tangible property is located; and (5) the

country from which it derives the greatest sales and revenues from its operations.7

         To address these factors, Level 3 Parent and GCL have surveyed the Securities and

Exchange Commission (“SEC”) filings and other publicly-available materials (such as annual

reports) issued by their shareholders. Level 3 Parent also instructed its transfer agent to survey

6
      See Foreign Ownership Guidelines for FCC Common Carrier and Aeronautical Radio
      Licenses, 19 FCC Rcd. 22,612, 22,621 (2004).
7
      Id. at 11-12.


                                                  8


the addresses of all of its registered shareholders. GCL requested a survey of its institutional

investors and of other shareholder data from NASDAQ, which provided GCL with data

compiled by FactSet Research Systems, Inc.

        For the purposes of this petition, Level 3 Parent has counted as foreign-owned those

institutional investors in both Level 3 Parent and GCL that are either organized or have their

principal place of business outside the United States. In determining whether those foreign-

owned investors are based in WTO Member countries, Level 3 Parent has also considered the

nationality of their investors, directors, and officers; the location of the majority of their tangible

property (if any); and the country from which they derive their greatest sales and/or revenue.

        Furthermore, for the purposes of this petition, Level 3 Parent has assumed that there will

be no dissenting GCL shareholders who will elect to receive fair-value compensation in lieu of

Level 3 Parent shares as consideration for the amalgamation. Level 3 Parent and GCL have no

way of knowing in advance whether any of GCL’s shareholders will dissent or whether the net

effect of dissent would increase or decrease Level 3 Parent’s post-consummation aggregate

foreign ownership.

        Accounting for the dilution factors and assuming that there will be no dissenting

shareholders, upon consummation of the Proposed Transaction, Level 3 Parent anticipates that it

will have a total known foreign ownership of approximately 35.89 percent. Two investors will

hold most of those foreign-owned shares:

    (1) ST Telemedia: As described in part I.A above, ST Telemedia, through its wholly-owned

        subsidiary STT Crossing, will own approximately 24.47 percent of Level 3 Parent’s

        issued and outstanding common stock following the consummation of the Proposed

        Transaction. Five out of ST Telemedia’s eight directors are Singapore citizens, and two




                                                   9


       out of its five senior management members are Singapore citizens. ST Telemedia’s

       headquarters is located in Singapore. The majority of ST Telemedia’s tangible property,

       operations, and personnel are located in Singapore. The Commission previously has

       found that ST Telemedia’s home market is Singapore.8

    (2) Fairfax Financial Holdings Limited (“Fairfax”): Fairfax is a Canadian financial holding

       company headquartered in Toronto, Ontario, where most of its tangible property is also

       located. After the closing of the Proposed Transaction, Fairfax will hold approximately

       8.16 percent of Level 3 Parent stock.9 Fairfax’s directors and officers are of Canadian

       and U.S. citizenship. In 2010, 48.5 percent of its revenue was generated in the United

       States and 25.6 percent in Canada.

In addition to the foreign ownership represented by ST Telemedia (through STT Crossing) and

Fairfax, Level 3 Parent also anticipates that it will have additional known direct and indirect

foreign ownership of approximately 3.26 percent. Level 3 Parent anticipates that it will have

only one known arguably non-WTO foreign investor following consummation of the Proposed

Transaction, a very small shareholder organized under the laws of, and headquartered in, the

Bailiwick of Jersey (although it is ultimately owned by a Canadian financial services company).

In Exhibit A, Level 3 Parent lists its anticipated post-consummation foreign shareholders and


8
    See GCL Transfer Order, 18 FCC Rcd. at 20,323-24 ¶ 27. The Commission likewise found
    that the home market of ST Telemedia’s direct parent, Temasek, is Singapore. See id.
9
    Fairfax will hold that stock jointly with V. Prem Watsa, an individual and Canadian citizen,
    and three holding companies: 1109519 Ontario Limited (“1109519”), an Ontario
    corporation; The Sixty Two Investment Company Limited (“Sixty Two”), a British Columbia
    corporation; 810679 Ontario Limited (“810679”), an Ontario corporation. In addition,
    Fairfax manages a portion of its Level 3 Parent shares for Odyssey America Reinsurance
    Corporation (“Odyssey”), a Connecticut corporation. Fairfax, Mr. Watsa, 1109519, Sixty
    Two, and 810679 will share voting and dispositive power to all of the Level 3 Parent
    common stock held by Fairfax. Odyssey will hold voting and dispositive power for 2.72
    percent of post-consummation Level 3 Parent stock.


                                                10


provides data addressing the Commission’s home-market analysis to determine the WTO status

of its investors. In addition, approximately 10.22 percent of anticipated post-consummation

Level 3 Parent shareholders are retail investors whose names and nationalities are unknown.

        Of its U.S. investors, Level 3 Parent anticipates it will have only one shareholder with a

greater-than-10-percent interest: Southeastern Asset Management, Inc. (“SAM”). SAM is a

corporation organized and headquartered in Tennessee. SAM’s principal business is providing

investment advisory services and it is the investment advisor to the Longleaf Partners Funds, a

Massachusetts business trust. Upon consummation of the Proposed Transaction, SAM will hold

approximately 17.37 percent of Level 3 Parent’s shares. SAM is an independent, employee-

owned corporation. Approximately 85 percent of its shares are owned by U.S. investors. All of

SAM’s tangible property is located in the United States. SAM’s directors and officers are of

U.S. citizenship and each has a business address at SAM’s principal executive offices, 6410

Poplar Avenue, Suite 900, Memphis, TN 38119.

        In addition to SAM’s interest, Level 3 Parent anticipates additional U.S. equity-and-

voting interests of approximately 32.42 percent upon consummation of the Proposed

Transaction. Level 3 Parent also expects that approximately 4.10 percent of its post-close issued

and outstanding shares will be held by Level 3 Parent and GCL employees pursuant to RSUs,

options, and warrants offered by each company.10




10
     This number represents shares issuable pursuant to RSUs that have been issued by Level 3
     Parent to its employees and the employees of its subsidiaries as well as RSUs, options, and
     warrants issued by GCL to its employees. Transfer restrictions on Level 3 Parent’s RSUs are
     expected to lapse between the date of this Petition and the closing date; similarly, GCL
     employees whose RSUs, options, and warrants will vest during that time period will be
     issued shares of Level 3 Parent common stock.


                                                 11


III.         REQUEST FOR PUBLIC INTEREST DETERMINATION

             Level 3 Parent petitions the Commission for a determination that the indirect foreign

ownership in TelCove and Vyvx of approximately 46.11 percent at closing, as detailed in part II

above and the attached Exhibit A, would serve the public interest. Level 3 Parent further

petitions the Commission to authorize additional margins of an aggregate of 25 percent of

foreign equity and/or voting rights, in order first to accommodate the ability of STT Crossing to

acquire further shares in Level 3 Parent of up to a limit of 34.5 percent of Level 3 Parent’s

outstanding shares pursuant to a Stockholder Rights Agreement by and between Level 3 Parent

and STT Crossing, with the balance being used to accommodate other foreign shareholders as

well as potential fluctuations in stock ownership in publicly traded Level 3 Parent stock.

             Section 310(b)(4) establishes a 25-percent limitation on indirect, attributable foreign

investment in U.S. common carrier radio licenses.11 Nevertheless, Section 310(b)(4) also

authorizes the Commission to permit higher levels of foreign ownership if doing so is not

inconsistent with the public interest.12 In its Foreign Participation Order, the Commission

determined that it would promote competition in the United States and serve the public interest

to allow indirect foreign ownership beyond the 25-percent benchmark established by Section

310(b)(4). Specifically, under the open entry policy, a presumption exists that investment from

WTO Member countries is consistent with the public interest.13

             Level 3 Parent therefore petitions the Commission for a declaratory ruling permitting

indirect foreign ownership of TelCove and Vyvx by:


11
       47 U.S.C. § 310(b)(4).
12
       Id.
13
       Rules and Policies on Foreign Participation in the U.S. Telecommunications Market, Report
       and Order and Order on Reconsideration, 12 FCC Rcd. 23,891 ¶ 9 (1997).


                                                      12


       (1)    ST Telemedia (covering both the approximate 24.47-percent equity-and-voting

              interest to be acquired upon consummation of the Proposed Transaction and the

              potential acquisition of additional equity-and-voting interests, up to an aggregate

              amount of 34.5 percent);

       (2)    the other foreign investors named in Exhibit A (including approximately 11.42-

              percent voting-and-equity interests held by investors from WTO Member

              countries, an approximate 0.0000021-percent voting-and-equity interest held by

              an investor arguably from a non-WTO Member country, and approximately

              10.22-percent voting-and-equity interests held by retail investors of unknown

              nationality and therefore treated as investors from non-WTO Member countries

              according to Commission practice); and

       (3)    other foreign investors (up to the remaining balance of an additional, aggregate

              25-percent equity and/or voting interest, after taking into account any potential

              additional acquisitions by ST Telemedia, as described above), without seeking

              further Commission approval under Section 310(b)(4).

       The instant petition seeks approval of direct investment in Level 3 Parent, and therefore

indirect investment in TelCove and Vyvx, by individuals and entities from WTO Member

countries as set forth in Exhibit A. Post-consummation, Level 3 Parent expects the indirect

foreign ownership in TelCove and Vyvx to break down as shown in Table 1 below:




                                               13


                                              Table 1:

                           Summary of Indirect Foreign Investment
                                by Investor Home Market

                             Country                  Percentage Ownership
                    Singapore                                  24.5014
                    Canada                                      8.55
                    United Kingdom                              1.25
                    Bermuda                                     0.85
                    Other WTO                                   0.74
                    Other Non-WTO                             <0.01
                    Unknown nationality                       10.22

Other investors from WTO-Member countries—each with equity-and-voting interests less than

0.40 percent—are located in Argentina, Australia, Austria, Belgium, Denmark, France,

Germany, Ireland, Japan, Kenya, Luxembourg, New Zealand, Norway, South Africa, Spain,

Sweden, Switzerland, and The Netherlands. The only known potential investor from a non-

WTO-Member country is expected to be RBC Investment Solutions (CI) Limited, located in the

Bailiwick of Jersey, Channel Islands, a U.K. crown dependency that is not covered by U.K.

WTO commitments. That entity—a Jersey subsidiary of a Canadian financial institution—is

expected to hold approximately 0.0000021 percent of Level 3 Parent stock following

consummation of the Proposed Transaction.

        In addition to the known shareholders, approximately 10.22 percent of Level 3 Parent

investors are retail (rather than institutional) shareholders of unknown nationality.

Consequently, Level 3 Parent also seeks authority to accept additional foreign investment

beyond that identified herein, in order to accommodate those unknown investors as well as

potential fluctuations in the ownership of its publicly-traded stock. This investment is consistent


14
     Of this amount, approximately 0.03% is attributable to Singaporean investors other than ST
     Telemedia.


                                                 14


with the Commission’s open entry policy, and should be presumed to be in the public interest.

There is no evidence to rebut that presumption.

       The Proposed Transaction will serve the public interest by offering customers an

expanded suite of services—globally-delivered transport, Internet protocol-based, data, content

delivery, data center, collocation, and voice services—and more extensive geographic reach in

North America, Latin America, Europe, and Asia with a combination of intercity and metro

networks and undersea cable facilities. The Proposed Transaction will enhance growth

opportunities by combining Level 3 Parent’s premier position with wholesale and content

customers with GCL’s expertise serving national and multinational corporations as well as

carrier customers. The Proposed Transaction will also join two competitive and complementary

providers and greatly strengthen their ability to compete with larger competitors in the U.S.

market, such as AT&T and Verizon Business. Consummation of the Proposed Transaction is

expected to improve Level 3 Parent’s credit profile and significantly strengthen its balance sheet.

Level 3 Parent also expects its improved cash flow will permit further domestic and international

network expansion. The Proposed Transaction will also return GCL and its businesses to U.S.

management control and predominantly U.S. ownership at closing. As described above, ST

Telemedia’s majority interest (through STT Crossing) in GCL will be replaced by a minority

interest initially of approximately 24.47 percent in Level 3 Parent. Whereas STT Crossing

currently appoints 8 out of 10 directors on GCL’s board, approves the appointment and

replacement of GCL’s chief executive officer, and retains other veto rights, STT Crossing will

have—following the consummation of the Proposed Transaction—the ability only to designate a

minority of Level 3 Parent’s directors and will not have any ability to approve appointment or




                                                  15


replacement of Level 3 Parent’s CEO or veto other actions by Level 3 Parent’s management or

board of directors.




                                             16


                                        CONCLUSION

       For the foregoing reasons, Level 3 Parent requests that the Commission issue a

declaratory ruling that indirect foreign investment in TelCove and Vyvx is consistent with the

public interest under Section 310(b)(4) of the Communications Act, as amended, and the

Commission’s Foreign Participation Order.



                                              Respectfully submitted,

                                               LEVEL 3 COMMUNICATIONS, INC.




John T. Nakahata                               Neil Eckstein
Kent D. Bressie                                Assistant Chief Legal Officer
Kristine Laudadio Devine                       LEVEL 3 COMMUNICATIONS, INC.
WILTSHIRE & GRANNIS LLP                        1025 Eldorado Boulevard
1200 18th Street, N.W., Suite 1200             Broomfield, Colorado 80021
Washington, D.C. 20036-2516                    +1 720 888 2514 tel
+1 202 730 1337 tel

Counsel for Level 3 Communications, Inc.
and Its Subsidiaries


12 May 2011




                                               17


                    LIST OF EXHIBITS



Exhibit A: Table Listing Post-Close Foreign Ownership Interests

Exhibit B: Diagram Showing Pre-Close Direct and Indirect Ownership of
           TelCove FWL, Inc., and Vyvx, LLC

Exhibit C: Diagram Showing Post-Close Direct and Indirect Ownership of
           TelCove FWL, Inc., and Vyvx, LLC


                EXHIBIT A

Post-Consummation Foreign Ownership Interests


                                  EXHIBIT B:

  Pre-Close Ownership of TelCove FWL, Inc. and Vyvx, LLC




                                                     Southeastern Asset
   Other (non-controlling)
                                                      Management, Inc.
  shareholders, in aggregate
                                                   (Tennessee corporation)

                      68.54%                       31.46%




                          Level 3 Communications, Inc.
                             (Delaware corporation)


                                            100%

                               Level 3 Financing, Inc.
                               (Delaware corporation)


                                            100%

                          Level 3 Communications, LLC
                                 (Delaware LLC)


        100%                                                        100%

TelCove Operations, LLC                                  WilTel Communications, LLC
    (Delaware LLC)                                             (Delaware LLC)

               100%                                                    100%

   TelCove FWL, Inc.                                            Vyvx, LLC
 (Delaware corporation)                                       (Delaware LLC)


                                                 EXHIBIT C:

                 Post-Close Ownership of Telcove FWL, Inc. and Vyvx, LLC

                                                                                     Temasek Holdings
                                   Other shareholders of                              (Private) Limited
Other shareholders with              U.S. nationality                               (Singapore company)
 nationalities of WTO
  member countries                              ~32.42%                                        100%

               ~11.42%                                                            Singapore Technologies
                                                                                     Telemedia Pte Ltd
Other shareholders with                                                            (Singapore company)
                                                        Southeastern Asset
 nationalities of non-
                                                         Management, Inc.                      100%
WTO member countries
                                                      (Tennessee corporation)
                                                                                   STT Communications
          ~0.0000021%                                              ~17.37%           Ltd (Singapore
                                                                                        company)
  Other shareholders of
  unknown nationality                                                                          100%

                                                                                     STT Crossing Ltd
               ~10.22%
                                                                                    (Mauritius company)
   RSUs, options, and                                                                          ~24.47%
      warrants

               ~4.10%
                                          Level 3 Communications, Inc.
                                             (Delaware corporation)

                                                           100%

                                             Level 3 Financing, Inc.
                                             (Delaware corporation)

                                                           100%

                                          Level 3 Communications, LLC
                                                 (Delaware LLC)


                          100%                                                     100%

               TelCove Operations, LLC                                 WilTel Communications, LLC
                   (Delaware LLC)                                            (Delaware LLC)

                                 100%                                                100%

                  TelCove FWL, Inc.                                            Vyvx, LLC
                (Delaware corporation)                                       (Delaware LLC)























Document Created: 2011-09-27 13:55:48
Document Modified: 2011-09-27 13:55:48

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