Long-Term Debt and Credit Facilities

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Long-Term Debt and Credit Facilities

Long-Term Debt and Credit Facilities

The following table reflects the consolidated long-term debt of Lumen Technologies, Inc. and its subsidiaries as of the dates indicated below, including unamortized discounts and premiums and unamortized debt issuance costs:

	Interest Rates(1)	Maturities(1)	June 30, 2023		December 31, 2022
			(Dollars in millions)
Senior Secured Debt: (2)
Lumen Technologies, Inc.
Revolving Credit Facility(3)	SOFR + 2.00%	2025	$	200	—
Term Loan A(4)	SOFR + 2.00%	2025	962		991
Term Loan A-1(4)	SOFR + 2.00%	2025	275		283
Term Loan B(5)	SOFR + 2.25%	2027	3,916		3,941
Senior notes	4.000%	2027	1,250		1,250
Subsidiaries:
Level 3 Financing, Inc.
Tranche B 2027 Term Loan(6)	SOFR + 1.75%	2027	2,411		2,411
Senior notes	3.400% - 10.500%	2027 - 2030	2,425		1,500
Senior Notes and Other Debt:
Lumen Technologies, Inc.
Senior notes	4.500% - 7.650%	2025 - 2042	2,143		3,722
Subsidiaries:
Level 3 Financing, Inc.
Senior notes	3.625% - 4.625%	2027 - 2029	3,940		3,940
Qwest Corporation
Senior notes	6.500% - 7.750%	2025 - 2057	1,986		1,986
Term loan(7)	SOFR + 2.50%	2027	215		215
Qwest Capital Funding, Inc.
Senior notes	6.875% - 7.750%	2028 - 2031	192		192
Finance lease and other obligations(8)	Various	Various	299		317
Unamortized discounts, net			(3)		(7)
Unamortized debt issuance costs			(158)		(169)
Total long-term debt			20,053		20,572
Less current maturities			(154)		(154)
Long-term debt, excluding current maturities			$	19,899	20,418

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(1)As of June 30, 2023.

(2)See Note 7—Long-Term Debt and Credit Facilities in our Annual Report on Form 10-K for the year ended December 31, 2022 for a description of certain parent or subsidiary guarantees and liens securing this debt.

(3)Revolving Credit Facility had an interest rate of 7.262% as of June 30, 2023.

(4)Term Loans A and A-1 had interest rates of 7.217% and 6.384% as of June 30, 2023 and December 31, 2022, respectively.

(5)Term Loan B had interest rates of 7.467% and 6.634% as of June 30, 2023 and December 31, 2022, respectively.

(6)The Level 3 Tranche B 2027 Term Loan had interest rates of 6.967% and 6.134% as of June 30, 2023 and December 31, 2022, respectively.

(7)The Qwest Corporation Term Loan had interest rates of 7.717% and 6.640% as of June 30, 2023 and December 31, 2022, respectively.

(8)Excludes finance lease obligations of our EMEA business classified as held for sale.

Long-Term Debt Maturities

Set forth below is the aggregate principal amount of our long-term debt as of June 30, 2023 (excluding unamortized discounts, net, and unamortized debt issuance costs), maturing during the following years. As a result of classifying our EMEA business as held for sale on our June 30, 2023 consolidated balance sheet, the amounts presented below do not include maturities of the finance lease obligations of that business. See Note 2—Planned Divestiture of the EMEA Business.

	(Dollars in millions)
2023 (remaining six months)	$	76
2024	157
2025	1,864
2026	498
2027	9,386
2028 and thereafter	8,233
Total long-term debt	$	20,214

Exchange Offers and Repurchases

Pursuant to exchange offers that commenced on March 16, 2023 (the “Exchange Offers”), on March 31, 2023, Level 3 Financing, Inc. issued $915 million of its 10.500% Senior Secured Notes due 2030 (the “10.500% Notes”) in exchange for $1.535 billion of Lumen’s outstanding senior unsecured notes. On April 17, 2023, in connection with the Exchange Offers, Level 3 Financing, Inc. issued an additional $9 million of its 10.500% Notes in exchange for $19 million of Lumen's outstanding senior unsecured notes. All exchanged notes were concurrently cancelled. These transactions resulted in a net reduction in the aggregate principal amount of Lumen’s consolidated indebtedness, as of June 30, 2023, of approximately $630 million. In addition to the above described exchange offers, we repurchased $24 million aggregate principal amount of Lumen's outstanding senior unsecured notes during the first quarter of 2023. These above-described transactions resulted in an aggregate gain of $618 million during the six months ended June 30, 2023.

The following table sets forth the aggregate principal amount of each series of Lumen’s senior unsecured notes retired during the six months ended June 30, 2023, in connection with the above-described exchange transactions:

Debt	Period of Reduction	(Aggregate principal amount in millions)
5.625% Senior Notes, Series X, due 2025	Q1 2023	$	48
7.200% Senior Notes, Series D, due 2025	Q1 2023	21
5.125% Senior Notes due 2026	Q1 2023	291
6.875% Debentures, Series G, due 2028	Q1 2023	52
5.375% Senior Notes due 2029	Q1 2023	275
4.500% Senior Notes due 2029	Q1 2023	556
7.600% Senior Notes, Series P, due 2039	Q1 2023	161
7.650% Senior Notes, Series U, due 2042	Q1 2023	131
5.625% Senior Notes, Series X, due 2025	Q2 2023	1
4.500% Senior Notes due 2029	Q2 2023	2
7.600% Senior Notes, Series P, due 2039	Q2 2023	3
7.650% Senior Notes, Series U, due 2042	Q2 2023	13
Total		$	1,554

Level 3 Financing, Inc.’s obligations under the 10.500% Notes will be guaranteed on a secured basis by its direct parent, Level 3 Parent, LLC, and certain of its material domestic subsidiaries that guarantee the term loan under Level 3 Financing, Inc.’s existing senior secured credit facility and existing senior secured notes (the “Issuer’s Secured Debt”), subject in certain instances to receipt of regulatory approvals. Such guarantees, when provided by each entity, will be secured by liens on substantially the same collateral that is pledged to secure the Issuer’s Secured Debt.

Revolving Credit Facility Borrowings and Repayments

During the three and six months ended June 30, 2023, Lumen borrowed $525 million from, and made repayments of $325 million to, its Revolving Credit Facility.

Covenants

Certain of our debt instruments contain affirmative and negative covenants. Debt at Lumen Technologies, Inc. and Level 3 Financing, Inc. contains more extensive covenants including, among other things and subject to certain exceptions, restrictions on the ability to declare or pay dividends, repay certain other indebtedness, create liens, incur additional indebtedness, make investments, engage in transactions with affiliates, dispose of assets and merge or consolidate with any other person. Also, Lumen Technologies, Inc. and certain of its affiliates will be required to offer to purchase certain of their respective outstanding debt under defined circumstances in connection with specified "change of control" transactions.

Certain of our debt instruments contain cross-payment default or cross-acceleration provisions.

Compliance

As of June 30, 2023, Lumen Technologies, Inc. believes it and its subsidiaries were in compliance with the provisions and financial covenants in their respective material debt agreements in all material respects.