On negotiating with pirates

Some phone calls stay with you. Like the one from our CFO Chris Stansbury in July 2023.

“Kate, we just received a letter.”

“What did it say?” I asked.

“Arrrgh.”

I laughed. Then I cried.

Our creditors – “the pirates,” as we came to call them – were coming.

Not because we’d missed a payment. We hadn’t.

Not because the company had stopped operating. It hadn’t.

They claimed we had triggered a technical default. They believed they had leverage, and they intended to use it. At the exact moment we were trying to reinvent Lumen.

The months that followed produced one of the largest out-of-court debt restructurings in history. More than $15 billion. Dozens of lawyers, bankers, investors, advisors, and enough documents to make even our general counsel question his life choices.

People ask me what it was like to lead through that. They expect a technical story about creditors, covenants, and negotiations.

But this isn’t that story. This is a story about what it takes to play to win.

When I joined Lumen, we had inherited more than a complex balance sheet. We inherited a company that had spent years under pressure, where survival had started to feel like success. We were playing not to lose.

The restructuring forced a choice. We could go to court, hit the “easy button,” and likely spend years in a supervised restructuring process.

Or we could bet on ourselves, negotiate with the pirates, and accept painful terms in exchange for room to run the turnaround.

The bankers and lawyers suggested we choose court. Start fresh. Reduce the risk.

We knew something they didn’t, though. Hyperscalers were starting to talk to us about multibillion-dollar network investments.

We could win that business. We could recapitalize the company. We could reposition Lumen as critical infrastructure for AI.

But not from bankruptcy court.

So, we chose the harder path. Lower odds of winning. Bigger upside.

We chose to play to win.

Playing to win takes conviction. And conviction isn’t certainty. Certainty is a luxury. Conviction is what you carry when the evidence is incomplete, the critics are loud, and the consequences are real.

There were plenty of dark 2 a.m. moments when my inside voice asked, “Oh, shit, what are we doing?” Each morning, I’d shine light on those doubt monsters by calling someone from my bench of strategic advisors.

What's changed? What do we know? What should we do differently?

Then, back to work.