Long-Term Debt

As of June 30, 2015 and December 31, 2014, long-term debt was as follows:



(dollars in millions)	June 30, 2015			December 31, 2014
Senior Secured Term Loan*	$	4,611		$	4,611
Floating Rate Senior Notes due 2018 (3.914% as of June 30, 2015 and 3.826% as of December 31, 2014)	300			300
9.375% Senior Notes due 2019	—			500
8.125% Senior Notes due 2019	—			1,200
8.875% Senior Notes due 2019	—			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			1,000
5.75% Senior Notes due 2022	600			600
5.625% Senior Notes due 2023	500			—
5.125% Senior Notes due 2023	700			—
5.375% Senior Notes due 2025	800			—
7% Convertible Senior Notes due 2015	—			58
7% Convertible Senior Notes due 2015 Series B	—			275
Capital Leases	209			207
Total Debt Obligations	11,035			11,366
Unamortized Discount:
Discount on Senior Secured Term Loan	(17		)	(21		)
Discount on 9.375% Senior Notes due 2019	—			(6		)
Discount on 8.125% Senior Notes due 2019	—			(6		)
Total Unamortized Discount	(17		)	(33		)
Carrying Value of Debt	11,018			11,333
Less current portion	(17		)	(349		)
Long-term Debt, less current portion	$	11,001		$	10,984

* The $2 billion Tranche B Term Loan due 2022 had an interest rate of 4.5% as of December 31, 2014 and the $2 billion Tranche B-II Term Loan due 2022, which refinanced the Tranche B Term Loan due 2022 in full, had an interest rate of 3.5% as of June 30, 2015. The $815 million Tranche B-III Term Loan due 2019 and the $1.796 billion Tranche B Term Loan due 2020 each had an interest rate of 4.0% as of June 30, 2015 and December 31, 2014.

2015 Debt Issuances, Redemptions and Registrations

5.625% Senior Notes due 2023

In January 2015, the Company's wholly owned subsidiary, Level 3 Financing, Inc. (“Level 3 Financing”) issued $500 million in aggregate principal amount of its 5.625% Senior Notes due 2023 (the “5.625% Senior Notes”). The net proceeds from the offering of the 5.625% Senior Notes, together with cash on hand, were used to redeem, on April 1, 2015, all of Level 3 Financing’s approximately $500 million aggregate principal amount of 9.375% Senior Notes due 2019, including accrued interest, applicable premiums and expenses. Total loss on extinguishment of debt related to the 9.375% Senior Notes due 2019 for the three months ended June 30, 2015 was $36 million.

The 5.625% Senior Notes will mature on February 1, 2023. Interest on the 5.625% Senior Notes is payable on June 15 and December 15 of each year, beginning on June 15, 2015.

Debt issuance costs of approximately $9 million were capitalized and are being amortized over the term of the notes.

The 5.625% 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 February 1, 2018, at 100% of the principal amount of 5.625% 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 February 1, 2018, 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 February 1, of the years indicated below:



Year	Redemption Price
2018	102.8125	%
2019	101.4063	%
2020 and thereafter	100.0000	%

At any time or from time to time on or prior to February 1, 2018, the Company may redeem up to 40% of the original aggregate principal amount of the 5.625% Senior Notes at a redemption price equal to 105.625% of the principal amount of the 5.625% 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 Level 3 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 5.625% 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 notes are fully and unconditionally guaranteed on an unsubordinated unsecured basis by the Company and Level 3 Communications, LLC.

7% Convertible Senior Notes due 2015

During the first quarter of 2015, holders converted the remaining $333 million aggregate principal amount of the Level 3's 7% Convertible Senior Notes due 2015 to common equity. Upon conversion, the Company issued an aggregate of approximately 12 million shares of Level 3 common stock, representing the approximately 37 shares per $1,000 note into which the notes were then convertible.

5.125% Senior Notes due 2023 and 5.375% Senior Notes due 2025

In April 2015, Level 3 Financing issued $700 million in aggregate principal amount of its 5.125% Senior Notes due 2023 (the “5.125% Senior Notes”) and $800 million in aggregate principal amount of its 5.375% Senior Notes due 2025 (the “5.375% Senior Notes”). The net proceeds from the offering of the 5.125% Senior Notes and 5.375% Senior Notes, together with cash on hand, were used to redeem all $1.2 billion aggregate principal amount of Level 3 Financing’s 8.125% Senior Notes due 2019 and all $300 million aggregate principal amount of the Company's 8.875% Senior Notes due 2019, including accrued interest, applicable premiums and expenses. Total loss on extinguishment of debt related to the 8.125% Senior Notes due 2019 for the three months ended June 30, 2015 was $82 million and total loss on extinguishment of debt related to the 8.875% Senior Notes due 2019 for the three months ended June 30, 2015 was $18 million.

The 5.125% Senior Notes will mature on May 1, 2023. Interest on the 5.125% Senior Notes is payable on March 1 and September 1 of each year, beginning on September 1, 2015. The 5.375% Senior Notes will mature on May 1, 2025. Interest on the 5.375% Senior Notes is payable on March 1 and September 1 of each year, beginning on September 1, 2015.

Debt issuance costs of approximately $25 million were capitalized and are being amortized over the respective term of the notes.

The 5.125% 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 May 1, 2018, at 100% of the principal amount of 5.125% 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 May 1, 2018, 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 May 1, of the years indicated below:



Year	Redemption Price
2018	102.5625	%
2019	101.2813	%
2020 and thereafter	100.0000	%

At any time or from time to time on or prior to May 1, 2018, the Company may redeem up to 40% of the original aggregate principal amount of the 5.125% Senior Notes at a redemption price equal to 105.125% of the principal amount of the 5.125% 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 Level 3 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 5.125% 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 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 May 1, 2020, 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 May 1, 2020, 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 May 1, of the years indicated below:



Year	Redemption Price
2020	102.6875	%
2021	101.7917	%
2022	101.8958	%
2023 and thereafter	100.0000	%

At any time or from time to time on or prior to May 1, 2018, the Company 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 Level 3 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.

Senior Secured Tranche B-II Term Loan due 2022

On May 8, 2015, Level 3 Financing, Inc. refinanced its existing $2 billion senior secured Tranche B Term Loan under its existing senior credit facility through the creation of a new senior secured Tranche B-II 2022 term loan in the aggregate principal amount of $2 billion (the "Tranche B-II 2022 Term Loan"). The Tranche B-II 2022 Term Loan was borrowed pursuant to an amended and restated credit agreement. The Tranche B-II 2022 Term Loan has an interest rate of LIBOR plus 2.75%, with a minimum LIBOR of 0.75%, and will mature on May 31, 2022. The Tranche B-II 2022 Term Loan was priced to lenders at par, with the payment to the lenders of an upfront fee of 25 basis points at closing.

The $2 billion Tranche B 2022 Term Loan had an interest rate of LIBOR plus 3.50%, with a minimum LIBOR of 1.00%, and matured on January 31, 2022. The Company expensed debt issuance costs of approximately $20 million for the portion of the transaction considered to be an extinguishment.

Debt issuance costs related to the Tranche B 2022 Term Loan of approximately $16 million continue to be amortized as interest expense using the new effective interest rate over its term for the portion of the transaction considered to be a modification.

Total loss on modification and extinguishment of debt related to the Tranche B 2022 Term Loan for the three months ended June 30, 2015 was $27 million.

Long-Term Debt Maturities

Aggregate future contractual maturities of long-term debt and capital leases (excluding discounts) were as follows as of June 30, 2015 (dollars in millions):



2015 (remaining six months)	$	13
2016	9
2017	8
2018	308
2019	823
2020	3,479
Thereafter	6,395
	$	11,035