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Buffett into Telco.

  1. stocko

    8,034 Posts.

    NEW YORK (CNN/Money) - Billionaire investor Warren Buffett is backing an expansion move by a small telecom company.

    Buffett, working through his Berkshire Hathaway Inc. investment unit, is part of a group of investors providing $500 million in cash to Level 3 Communications, a fiber-optic carrier. Level 3 said it plans to use the money for acquisitions.

    The move is unusual for Buffett, who has long had a reputation for avoiding technology oriented investments.

    The cash infusion is being made through a debt offering. Level 3 is selling $500 million of 10-year convertible notes yielding 9 percent to Berkshire Hathaway and two institutions, Longleaf Partner Funds and Legg Mason Inc. Longleaf will buy $300 million of the notes. Berkshire Hathaway Inc. and Legg Mason will each take on $100 million.

    The notes are convertible into common stock at the option of the holder.

    The transaction is expected to close Monday.

    Level 3 said in a press release it will use the funds for potential acquisitions, capital expenditures and working capital

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