Level 3 Gets Genuity At Bargain PriceLevel 3 Gets Genuity At Bargain Price

BROOMFIELD, Colo. (AP)--Level 3 Communications said Tuesday that it completed acquisition of bankrupt Internet infrastructure company Genuity Inc.--at about half the initial price.

Broomfield-based Level 3, which operates a global fiber-optic communications network, announced in November it planned to pay $242 million in cash for Genuity and assume many of the Woburn-based firm's long-term operating agreements. Level 3 said at the time the actual price could be reduced.

On Tuesday, the companies announced the deal had closed but said the price had fallen to $60 million in cash plus $77 million in cash prepayments to vendors for services in 2003, subject to further adjustments.

Genuity said the $242 million price included "adjustments related to the timing of closing, employee severance reimbursements, and other adjustments relating to decisions made to date regarding Genuity's operating agreements."

Genuity filed for bankruptcy in late November as part of the agreement. Level 3 plans to continue to operate Genuity as a separate business.

Genuity also announced that Paul R. Gudonis, formerly chairman and chief executive, would join Level 3 as executive vice president to work on the Genuity integration.

Level 3 has 6,000 employees. Genuity employs 2,300 people.

Level 3 is also assuming some of Genuity's long-term operating agreements, and the company said it had reached agreements with Genuity's two largest customers, Verizon and America Online.

The payments from Level 3, along with the cash remaining on Genuity's balance sheet, will be available to pay the creditors of Genuity, which filed for Chapter 11 bankruptcy protection in November.

The news came as Level 3 reported that it narrowed its fourth-quarter losses to $313 million, from $3.28 billion a year ago. Revenue for the quarter was $945 million, up from $326 million in the same quarter a year before.