Long-Term Debt

As of September 30, 2014 and December 31, 2013, long-term debt was as follows:



(dollars in millions)	September 30, 2014			December 31, 2013
Senior Secured Term Loan*	$	2,611		$	2,611
Floating Rate Senior Notes due 2018 (3.823% as of September 30, 2014 and 3.846% as of December 31, 2013)	300			300
11.875% Senior Notes due 2019	605			605
9.375% Senior Notes due 2019	500			500
8.125% Senior Notes due 2019	1,200			1,200
8.875% Senior Notes due 2019	300			300
8.625% Senior Notes due 2020	900			900
7% Senior Notes due 2020	775			775
6.125% Senior Notes due 2021	640			640
5.375% Senior Notes due 2022	1,000			—
7% Convertible Senior Notes due 2015	200			200
7% Convertible Senior Notes due 2015 Series B	275			275
Capital Leases	66			73
Other	12			13
Total Debt Obligations	9,384			8,392
Unamortized Discount:
Discount on Senior Secured Term Loan	(6		)	(7		)
Discount on 11.875% Senior Notes due 2019	(7		)	(8		)
Discount on 9.375% Senior Notes due 2019	(7		)	(7		)
Discount on 8.125% Senior Notes due 2019	(6		)	(7		)
Discount on 7% Convertible Senior Notes due 2015	—			(1		)
Total Unamortized Discount	(26		)	(30		)
Carrying Value of Debt	9,358			8,362
Less current portion	(502		)	(31		)
Long-term Debt, less current portion	$	8,856		$	8,331

* The $815 million Tranche B-III 2019 Term Loan due 2019 and the $1.796 billion Tranche B 2020 Term Loan due 2020 each had an interest rate of 4.00% as of September 30, 2014 and December 31, 2013.

2014 Debt Issuances and Registrations

5.375% Senior Notes due 2022

In August 2014, Level 3 Escrow II, Inc. (“Level 3 Escrow”), an indirect, wholly owned subsidiary of Level 3 Communications, Inc., issued $1.0 billion in aggregate principal amount of its 5.375% Senior Notes due 2022 (the “5.375% Senior Notes”). As a result of certain conditions that could have required Level 3 Escrow to redeem the notes on or before June 15, 2015, discussed further below, the initial term of the 5.375% Senior Notes was deemed to be through June 2015. When the contingency was resolved on October 31, 2014, the Company reclassified these notes into long-term debt in the accompanying Consolidated Balance Sheet as of September 30, 2014. The 5.375% Senior Notes will mature on August 15, 2022. Interest on the 5.375% Senior Notes is payable on May 15 and November 15 of each year, beginning on November 15, 2014. Debt issuance costs of approximately $17 million were capitalized and are amortized over the term of the loan.

The gross proceeds from the offering of the 5.375% Senior Notes were deposited into a segregated escrow account and were to remain in escrow until the date of the satisfaction of certain escrow conditions including, but not limited to, the substantially concurrent consummation of the acquisition by Level 3 of tw telecom pursuant to the Merger and the assumption of the 5.375% Senior Notes by Level 3 Financing, Inc. (the “Notes Assumption”). In conjunction with the completion of the Merger on October 31, 2014 (see Note 2 — Events Associated with the Merger of tw telecom), the escrow conditions were satisfied. Following the Notes Assumption, Level 3 and Level 3 Communications, LLC guaranteed the 5.375% Senior Notes on an unsecured basis. Following the release of the escrowed funds in connection with the Notes Assumption, the escrowed funds were used to finance the cash portion of the merger consideration payable to tw telecom stockholders and to refinance certain existing indebtedness of tw telecom, including fees and premiums, in connection with the closing of the Merger.

The 5.375% Senior Notes are subject to redemption at the option of Level 3 Financing, in whole or in part, at any time or from time to time, upon not less than 30 nor more than 60 days’ prior notice, (i) prior to August 15, 2017, at 100% of the principal amount of 5.375% Senior Notes so redeemed plus (A) the applicable make-whole premium set forth in the Indenture, as of the redemption date and (B) accrued and unpaid interest thereon (if any) up to, but not including, the redemption date, and (ii) on and after August 15, 2017, at the redemption prices set forth below (expressed as a percentage of principal amount), plus accrued and unpaid interest thereon (if any) up to, but not including the redemption date, if redeemed during the twelve months beginning August 15, of the years indicated below:



Year	Redemption Price
2017	102.688	%
2018	101.344	%
2019	100.000	%

At any time or from time to time after the Notes Assumption and on or prior to August 15, 2017, Financing may redeem up to 40% of the original aggregate principal amount of the 5.375% Senior Notes at a redemption price equal to 105.375% of the principal amount of the 5.375% Senior Notes so redeemed, plus accrued and unpaid interest thereon (if any) up to, but not including the redemption date, with the net cash proceeds contributed to Financing of one or more private placements to persons other than affiliates of Level 3 or underwritten public offerings of common stock of Level 3 resulting, in each case, in gross proceeds of at least $100 million in the aggregate. However, at least 60% of the original aggregate principal amount of the 5.375% Senior Notes must remain outstanding immediately after giving effect to such redemption. Any such redemption shall be made within 90 days following such private placement or public offering upon not less than 30 nor more than 60 days’ prior notice.

The offering of the 5.375% Senior Notes were not originally registered under the Securities Act of 1933, as amended, and the 5.375% Senior Notes may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The 5.375% Senior Notes were sold to persons reasonably believed to be “qualified institutional buyers” as defined in Rule 144A under the Securities Act of 1933, as amended, and non-U.S. persons outside the United States under Regulation S under the Securities Act of 1933, as amended. The registration rights agreement became effective as of October 31, 2014.

In October 2014, Level 3 Financing, Inc. received commitments from lenders to increase the borrowings under its existing senior secured credit facility through the creation of a new $2 billion Tranche B 2022 Term Loan (the "Tranche B 2022 Term Loan"). The borrowing was completed with the close of the acquisition of tw telecom on October 31, 2014. The Tranche B 2022 Term Loan included an up front payment to the Tranche B 2022 Term Loan lenders of 0.75 percent of par, will pay interest equal to LIBOR plus 3.5 percent with LIBOR set at a minimum of 1.0 percent and mature on January 31, 2022.

Upon closing of the Tranche B 2022 Term Loan, Level 3 Financing, Inc. used the gross proceeds to finance the cash portion of the merger consideration payable to tw telecom's stockholders under the Merger Agreement and to refinance certain existing indebtedness of tw telecom, including fees and premiums, in connection with the closing of that acquisition. See Note 2 — Events Associated with the Merger of tw telecom for additional information.

During the fourth quarter of 2014, the Floating Rate Senior Notes due 2018 issued by Level 3 Financing, Inc. in November 2013 were exchanged for a new issue of Floating Rate Senior Notes due 2018 with identical terms and conditions, other than those related to registration rights, in a registered exchange offer and are now freely tradeable. The Floating Rate Senior Notes due 2018 are guaranteed by Level 3 Communications, Inc. and Level 3 Communications, LLC.

During the fourth quarter of 2014, the 6.125% Senior Notes due 2021 issued by Level 3 Financing, Inc. in November 2013 were exchanged for a new issue of 6.125% Senior Notes due 2021 with identical terms and conditions, other than those related to registration rights, in a registered exchange offer and are now freely tradeable. The 6.125% Senior Notes due 2021 are guaranteed by Level 3 Communications, Inc. and Level 3 Communications, LLC.

Long-Term Debt Maturities

Aggregate future contractual maturities of long-term debt and capital leases (excluding discounts) were as follows as of September 30, 2014 (dollars in millions):



2014 (remaining three months)	$	22
2015	483
2016	7
2017	6
2018	306
2019	3,426
Thereafter	5,134
	$	9,384