BROOMFIELD, Colo. -- Level 3 Communications, Inc. (NASDAQ:LVLT) today announced that it has signed a definitive agreement to acquire TelCove, Inc., a privately held Pennsylvania-based telecommunications company. Under terms of the agreement, Level 3 will pay total consideration of $1.2375 billion, consisting of $637 million in shares of Level 3 common stock, $445 million in cash and $155.5 million in the assumption of debt.

TelCove is a leading facilities-based provider of metropolitan and regional communications services including transport, Internet access and voice services. TelCove's network has over 22,000 local and long haul route miles serving 70 markets across the eastern United States, with approximately 4,000 buildings on net. TelCove has annual revenues of about $390 million and Adjusted OIBDA of about $130 million. As part of the transaction, Level 3 will be acquiring over 300 LMDS and 39 GHz licenses covering 90 percent of the population of the United States.

"The acquisition of TelCove increases our ability to provide end-to-end bandwidth services to our customers," said James Q. Crowe, chief executive officer of Level 3. "In addition to the contribution to operating margins, this additional metropolitan and regional capability will enable us to extend the network reach we offer to our customers and enable TelCove's customers to benefit from our national network and broad suite of IP-based services.

"It has been a pleasure working with Doug Teitelbaum and Kurt Cellar of Bay Harbour Management as we worked to conclude this agreement, and we look forward to working with Bob Guth and the management team at TelCove in the coming months and years."

"Bay Harbour Management has been the controlling shareholder of TelCove for two years. Our team, headed by Kurt Cellar, has worked closely with TelCove to nurture growth through significant capital investment and acquisitions," said Doug P. Teitelbaum, managing partner of Bay Harbour Management, LC. "This merger with Level 3 accomplishes our goals by positioning us to be investors in a leading nationwide communications carrier."

"TelCove's metro fiber assets are among the most robust in the industry, and we have an outstanding base of loyal and satisfied customers who will benefit greatly from this acquisition, and a team of dedicated employees who are excited to play a key role in this unfolding vision," said Bob Guth, president and chief executive officer at TelCove. "This is a great day for all TelCove stakeholders, and a significant step by Level 3 that will drive real choice to customers on a national basis."

Level 3 Communications Inc. (NYSE: LVLT)