Level 3 Communications will pay $242 million in cash for the service provider.
Level 3 Communications Inc. will effectively acquire networking services provider Genuity Inc. by buying the struggling providers infrastructure and operations. Genuity will file for bankruptcy protection to facilitate the transaction.
The companies announced Wednesday afternoon that Level 3 will pay $242 million in cash and take on long-term operating obligations in exchange for "substantially all of the assets" of the Woburn, Mass., service provider. One of Genuitys lending banks did not agree to the transaction, but Verizon Communications Inc.the companys largest customer and legacy parentsupports it, the companies said in a press release.
Genuity was forced to try to restructure its debt in July after Verizon decided not to re-integrate the networking services group that it had spun off in 2000. Genuity has been operating under a series of extensions from its lenders ever since.
Level 3 will retain the name Genuity for the acquired managed services business, and it plans to continue serving existing enterprise customers. "We recognize the importance of these customers and are committed to ensuring they receive the highest quality service without disruption," Kevin OHara, president and chief operating officer of Level 3, said in the release. "As a result, we plan to combine these operations with those of our (i)Structure subsidiary in order to focus on the needs of those customers.
The transaction will have to be approved by the bankruptcy court and the federal government.