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Home My WebLink AboutCAG1993-0577 - Supplement - Approval Request for Transfer of Control - 08/06/2014 RECEIVE® August 6, 2014 CITY OF KENT Via Overnight Delivery CITY CLERK Ronald Moore, City Clerk City of Kent 220 Fourth Avenue South Kent, WA 98032 Re: Transfer of Control of tw telecom to Level 3 Communications, Inc. Dear Mr. Moore: On behalf of tw telecom of washington Ilc ("tw telecom"), this is to notify the City that Level 3 Communications, Inc. ("Level 3") and tw telecom inc. ("TWTC"), tw telecom's indirect parent company, entered into an Agreement and Plan of Merger (the "Merger Agreement") on June 15, 2014, whereby Level 3 will acquire direct ownership of TWTC and thereby indirect control of tw telecom. tw telecom is the holder of a franchise agreement ("Agreement") with the City pursuant to Ordinance 4112 dated May 20, 2014. Pursuant to Section 28 of the Agreement, the Parties respectfully request the consent of the City for the indirect transfer of control of tw telecom to Level 3. tw telecom will continue to be the counterparty to the Agreement and the indirect transfer of control of tw telecom at the parent company level will have no impact upon its performance of its obligations pursuant to the Agreement. In light of the many business and financial considerations affected by the timing of the consent process, the Parties respectfully request that, to the extent necessary, the City approve the Bering Boston proposed transfer of control as quickly as possible as all of the federal and state approvals Frankfurt are anticipated by October 1,2014. Hartford Hong Kong I. DESCRIPTION OF THE PARTIES Lexington(GSC) London Los Angeles A. TWTC and tw telecom New York Orange County TWTC is a publicly traded (NASDAQ: TWTC) Delaware corporation with its San Francisco Monica Santa Moni headquarters at 10475 Park Meadows Drive, Littleton, CO 80124. tw telecom holdings Silicon Valley inc. ("tw telecom holdings"), a wholly owned subsidiary of TWTC, is the direct parent of Tokyo tw telecom. TWTC's operating subsidiaries, including tw telecom, provide managed ' s network services, business Ethernet, data networking, converged, Internet Protocol ("IP") based virtual private network or "IP VPN", Internet access, voice, including voice over Internet Protocol or "VOIP", and network security services to a broad range of business Bingham McCutchen LLP and carrier customers. TWTC serves approximately 76 markets in the U.S. with its own zozo K Street NW Washington.DC fiber network and its network spans over 24,300 route miles. z0006-t8o6 +1.202-373.6000 +1.202.373.6001 6ingham.com August 6, 2014 Page 2 TWTC's operating subsidiaries are authorized to provide telecommunications services as competitive, non-dominant carriers pursuant to certification, registration or tariff requirements, or on a deregulated basis in 46 states and the District of Columbia. TWTC's operating subsidiaries are also authorized by the Federal Communications Commission ("FCC") to provide international and domestic interstate services as non- dominant carriers. B. Level Level 3 is a publicly traded (NYSE: LVLT) Delaware corporation with principal offices located at 1025 Eldorado Boulevard, Broomfield, CO 80021. Saturn Merger Sub 1, LLC and Saturn Merger Sub 2, LLC (together the "Merger Subs") are Delaware limited liability companies and wholly owned subsidiaries of Level 3 that were recently formed for the purpose of accomplishing the proposed transaction. Level 3 provides high-quality voice and data services to enterprise, government, wholesale and carrier customers over its IP-based network through its wholly owned indirect subsidiaries, the Level 3 Companies. Level 3 serves 119 markets in North America with 74,000 intercity fiber route miles. Level 3 subsidiaries are authorized by the FCC to provide international and domestic interstate services as non-dominant carriers and by the applicable state public service commissions, including Washington, to provide resold and/or facilities-based telecommunications services nationwide pursuant to certification, registration or tariff requirements, or on a deregulated basis. A copy of the Form 10-K and most recent Form 10-Q filed by Level 3 with the SEC is available at http://investors.level3.com/investor-relations/sec-filings/default.aspx. Such forms include Level 3's financial statements and information about Level 3's management. II. DESCRIPTION OF TRANSFER OF CONTROL TRANSACTION AND ITS ANTICIPATED EMIPACTS As a result of the transaction, Level 3 will indirectly control TWTC's operating subsidiaries, including tw telecom,through a Level 3 merger subsidiary that was formed for the purposes of the transaction and which will be renamed tw telecom llc. For the City's convenience, pre- and post-transaction organizational charts depicting the control structure for tw telecom are provided as Exhibit A. Immediately after consummation of the transaction, tw telecom will continue to operate its facilities and provide service to its customers under the same name and at the same rates, terms, and conditions, ensuring a seamless transition of ownership without confusion or adverse impact to customers. As stated above, tw telecom will continue to be the counterparty to the Agreement and the indirect transfer of control of tw telecom at the parent company level will have no impact upon its performance of its obligations pursuant to the Agreement. Bingham Mctutchen LLP bingham.com August 6, 2014 Page 3 III. THE PROPOSED TRANSACTION WILL ENHANCE COMPETITION AND SERVE THE PUBLIC INTEREST The Parties submit that the transaction described herein will serve the public interest. The transaction will bring together two successful competitive carrier organizations that have proven themselves in a highly competitive marketplace. The Parties expect that the merger will enable the combined entity to better meet the local, national and global needs of enterprises, wholesale buyers, and other customers. tw telecom's customers will benefit from Level 3's extensive local-to-global footprint. Existing and prospective customers of both companies will benefit from the combined product portfolio including a focus on helping enterprises and carriers manage growth. The transaction will enhance competition by combining two complementary, non- dominant carriers and strengthen their ability to compete against larger carriers such as AT&T and Verizon in enterprise and wholesale markets in the United States. Level 3's extensive long-haul and metro networks are complementary to tw telecom's deep metro footprint. Operation as an integrated company will allow each of the operating companies to be more competitive and to deliver greater value and variety of services to their customers than they do individually. Moreover, the transaction will be conducted in a manner that will be transparent to customers of tw telecom. The transaction will not result in a change of carrier for customers or any assignment of authorizations, and in no event will it result in the discontinuance, reduction, loss, or impairment of service to customers. Following consummation of the transaction, tw telecom will continue to provide high-quality communications services to its customers without interruption and without immediate change in rates,terms or conditions. In sum, the proposed transaction will not have a detrimental effect on, or result in a material change in, the services provided to existing customers of tw telecom. The proposed transaction should strengthen the ability of tw telecom to compete and to offer enhanced telecommunications services within the City. The proposed transaction will also not have negative effects in the City, since the stock transfer of its ultimate parent will not change the qualifications of tw telecom. tw telecom will remain the party to the Agreement and will continue to be well qualified to operate within the City in a safe and professional manner. Bingham McCutchen LLP bingham.com August 6, 2014 Page 4 For the reasons stated above, the Parties respectfully request consent from the City to the indirect transfer of control of tw telecom to Level 3 no later than October 1, 2014. If there are any questions regarding this matter, please do not hesitate to contact us. Respectfully submitted, &'n U- &6A'1� Jean Kiddoo Danielle Burt Bingham McCutchen LLP 2020 K Street,N.W. Washington, DC 20006-1806 Tel:(202)373-6000 Fax: (202)373-6001 jean.kiddoo@bingham.com danielle.burt@binghatn.com Counsel for Level 3 Communications, Inc. Richard E.Thayer Greg Diamond Senior Counsel Vice President Regulatory Affairs Level 3 Communications,Inc. tw telecom 1025 Eldorado Boulevard 10475 Park Meadows Drive Broomfield,CO 80021 Littleton,CO 80124 Tel: (720)888-2620 Tel:206-676-8052 rick.thayer@level3.com greg.diamond@twtelecom.com Bingham McCutchen LLP bingham.com EXHIBIT A Pre- and Post-Transaction Organizational Charts m f f f f g f D o m ° m m a m 0 3 0 0 0 0 0 0 3 o 3 3 ° 0 3 0 3 T 0 3 0 0 3 3 3 O V f °� m -. —,a o — 0 N S F O 7 3 M 0 0 :E O_ d 0 0 - CD 7 N o j w tC N O I N O - v � o f (n 0 0 DO i 3 M �____________________o_____ � \ ,..r N Cp1 _ = O O _ �~ Mco FMMm � f o 0 ° Mm m M 33 � � 3 ° 33 3 cc 00000 ° p o 3 0 M m o 3 3 0 N 0 3 3 3 3 3 0 3 3 0 ,» O ° O 00 - 0 s o 0voo � cco � 00 ° 3 N N 3 3 O �. M _ Q O v O °' O YH ° OmvfDia, 3m (a al ID m M'IQ 3 N N 3 X. 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