Level 3 Communications reached an agreement to terminate a multi-year contract under which it has to purchase wholesale dial access services, including the use of operating equipment, from Allegiance Telecom. Level 3 assumed the contract with Allegiance as part of its acquisition of Genuity's assets last year. To settle the contract, Level 3 has agreed to pay Allegiance $54 million in cash. The company has approximately $200 million of outstanding debt in the form of capital lease obligations that will be eliminated as a result of the settlement. The deal requires the approval of the bankruptcy court that is overseeing the Allegiance case. http://www.level3.com
- In February 2004, XO Communications won a bankruptcy court auction to acquire the assets of Allegiance Telecom and its subsidiaries except for Allegiance's customer premise equipment sales and maintenance business, its managed modem business and certain other Allegiance assets and operations. The wining bid was for approximately $311 million in cash and approximately 45.38 million shares of XO common stock. XO said the acquisition would make it the nation's largest national local telecommunications services provider, with approximately 330,000 customers and more than $1.6 billion in revenue. The company will have the largest network of nationwide connections to regional Bell operating companies' networks of any other CLEC, and double the PoPs within the 36 markets where both XO and Allegiance operate.
