WilTel Sale Completed

NEW YORK -- Leucadia National Corporation (NYSE: "LUK") today announced the completion of the sale of its telecommunications subsidiary, WilTel Communications Group, LLC, to Level 3 Communications, Inc. for aggregate consideration consisting of $486 million in cash (including $16 million for excess working capital, which is subject to adjustment, and $100 million in cash to reflect that amount of cash left in WilTel), and 115 million newly issued shares of Level 3 common stock, having an aggregate market value of $339 million (based on the $2.95 per share closing price of Level 3 common stock on December 22, 2005). Leucadia expects to report a pre-tax gain on the sale of approximately $180 million and will classify WilTel as a discontinued operation during the fourth quarter of 2005.

In connection with the sale, Leucadia retained those assets and liabilities of WilTel that were not purchased by Level 3. The retained assets include (i) WilTel's headquarters building located in Tulsa, Oklahoma, (ii) WilTel's cash and cash equivalents in excess of $100 million, and (iii) WilTel's marketable securities. In addition, Leucadia retained all of WilTel's right to receive cash payments from SBC Communications Inc. totaling $236 million pursuant to the previously announced Termination, Mutual Release and Settlement Agreement dated June 15, 2005 among the Company, WilTel and SBC. Prior to the closing, WilTel repaid its long-term debt obligations using its funds, together with funds advanced by Leucadia. In addition, the retained liabilities include WilTel's defined benefit pension plan and supplemental retirement plan obligation and certain other employee related liabilities and other claims. The net value of these retained assets and retained liabilities has not yet been determined.

The agreement with Level 3 requires that all parties make the appropriate filings to treat the purchase of WilTel's membership interests as a purchase of assets for federal, state and local income and franchise tax purposes. As a result, WilTel's operating loss carryforwards, including any tax loss carryforwards generated by the sale, will remain with Leucadia. Leucadia currently estimates that after the closing it has federal net operating loss carryforwards of approximately $4.9 billion, which are subject to qualifications, limitations and uncertainties as discussed in Leucadia's Annual Report on Form 10-K for the year ended December 31, 2004.

In a separate release:

BROOMFIELD, Colo. -- Level 3 Communications, Inc. (NASDAQ:LVLT) today announced that it has completed its acquisition of WilTel Communications Group, LLC. As consideration, Level 3 has paid Leucadia National Corporation (NYSE:LUK) 115 million shares of Level 3 common stock and $386 million in cash.

Pursuant to the purchase agreement signed by Level 3 and Leucadia on October 30, 2005, Level 3's cash consideration at closing was increased from the previously announced amount of $370 million, to reflect an improvement in WilTel's working capital and is subject to adjustment based on the subsequent calculation of actual closing date working capital. Level 3 paid an additional $100 million in consideration for $100 million in cash held by WilTel at the time of closing.

"There is a unique and compelling fit between WilTel and Level 3," said James Q. Crowe, chief executive officer of Level 3. "Because of this and hard work by all involved, we have been able to close this transaction ahead of schedule. Through this process, we have continued our analysis of the WilTel business and are confident in the overall financial projections we provided at the time we announced the definitive agreement. We have also continued our integration planning and we are extremely pleased with the progress we have made leading up to today's announcement."

"We are reiterating our previously announced overall revenue and cash flow projections for the acquisition," said Sunit S. Patel, chief financial officer of Level 3. "This transaction adds substantial new revenue from high quality customers and creates value from significant synergies resulting from elimination of duplicative common resources and network infrastructure. We continue to expect the acquisition to add $1.5-1.6 billion in revenue to our 2006 communications revenue which approximately doubles the size of our existing communications business.

"While we recognize that the contribution from the AT&T (formerly SBC) contract will diminish over time in accordance with their contract with WilTel, we continue to expect that this transaction will contribute approximately $50-90 million of incremental cash flow in 2006 and $125-150 million of incremental cash flow annually from 2007 onward. We expect to provide more detail when we announce our 2005 fourth quarter results in February 2006." Integration costs are expected to be $100-150 million.

WilTel Communications Group Inc.

Level 3 Communications Inc. (NYSE: LVLT)