Lumen's new debt-restructuring deal helps send besieged stock soaring

By Emily Bary

Company says deal will allow for 'significant financial flexibility'

Lumen Technologies Inc.'s stock price has eroded in recent years as the telecommunications company has faced deep challenges in its legacy businesses and issues with cash flow.

But shares were getting a nice lift Thursday after the company announced that it reached a new deal with creditors that it said would provide "significant financial flexibility."

Lumen (LUMN) has entered into an amended transaction support agreement, or TSA, with creditors representing more than $12.5 billion of the company's and its subsidiaries' outstanding debt and commitments. The group also represents more than 70% in aggregate of the debt maturing through 2027 for Lumen and Level 3, a business Lumen acquired in 2017.

Through the agreement, debt maturities will extend mainly to 2029 and beyond. The deal will give Lumen $1.325 billion of financing through new long-term debt and allow the company access to a new revolving credit facility with an expected amount of about $1 billion.

"This agreement represents another positive step forward in the Lumen turnaround story and creates substantial runway for the company to achieve its financial and capital-structure goals," Chief Executive Kate Johnson said in a release.

Lumen shares were up more than 17% in morning trading Thursday. The stock is still down sizably over a longer time horizon, off 86% over a two-year span, for instance.

Speaking at a Bank of America conference in November, Chief Financial Officer Chris Stansbury acknowledged that the company's "debt tower of 2027" was "so big" that it was causing the market to question whether it would even matter if Lumen was successful with its turnaround plans, hence Lumen's determination to restructure its debt.

-Emily Bary

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01-25-24 1129ET

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