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1/11/2004

Level 3 objects to Qwest deal

The Associated Press

DENVER — Level 3 Communications has asked a bankruptcy court to stall Qwest’s $300 million buyout of Allegiance Telecom because of concern about its effect on an Allegiance-Level 3 contract.
Broomfield-based Level 3 asked the court Thursday to order Qwest to explain how its proposed acquisition would affect Level 3’s contract to provide Internet service providers with access to dial-up modems. Dallas-based Allegiance supports the modem service business.
Qwest’s proposed deal to buy Allegiance’s assets out of bankruptcy would leave Allegiance a shell, according to documents Level 3 filed in U.S. Bankruptcy Court in New York.
“It must be emphasized that if the contemplated Qwest sale were to go forward in its proposed form, based on what it knows today, Level 3 would insist that it is impossible for (Allegiance) to perform its duties and obligations as required,” the documents said.
Qwest spokesman Tyler Gronbach said the objections of Level 3 and other companies to the sale are a normal part of the bankruptcy process.
Also filing objections to the sale were telecommunications company Corvis Corp., which made an offer to Allegiance; software maker Oracle Corp., which holds contracts with Allegiance; and an unsecured creditors committee.