Level 3

(LVLT)

plans to sell a $200 million convertible note in a rule 144a placement. It will use the proceeds, along with a $450 million term loan, to buy back debt that is coming due in four years.

The offering will consist of senior notes due 2011 that are convertible at a price that has yet to be determined. Some of the money raised will be used in a bond hedge and warrant transactions that are designed to limit dilution from the notes' conversion.

The company said its Level 3 Financing Inc. unit is seeking a $450 million senior secured term loan that will help fund the buybacks, which are covered under existing tender offers.

The stock was recently down a penny to $3.22 on Instinet.