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Lucent gets credit boost
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August 16, 2001: 5:37 p.m. ET
Telecom equipment provider to delay Agere spinoff for 6 months
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NEW YORK (CNNfn) - Lucent Technologies confirmed Thursday that its bankers eased restrictions on $4 billion in bank loans and that the spinoff of Agere Systems Inc. will be delayed for six months.
Murray Hill, N.J.-based Lucent (LU: Research, Estimates) said it will now move forward with phase two of its restructuring program. The plan will allow Lucent to take a $7 billion-to-$9 billion restructuring charge and cut up to 20,000 positions, a spokeswoman said.
Bankers includes new levels for earnings before taxes (EBITDA), net worth covenants, and changes in how the covenants are calculated.
Lucent, which failed in its $23.5 billion merger attempt with French networking firm Alcatel SA, has seen its shares plummet 89 percent from its 52-week high of $45.18. Shares for Lucent closed at $6.32 Thursday and gained 9 cents in aftermarket trading on Instinet to $6.41.
On July 24, Lucent reported a wider-than-expected loss for its third quarter and plans to cut 20,000 more jobs. The company has already chopped 19,000 jobs earlier this year, and plans to cut management ranks by up to 30 percent. Lucent also sold its fiber-optic unit to Furukawa Electric Co. of Japan and Corning Inc. for $2.75 billion.
The embattled telecom equipment provider said that it has changed conditions to the spinoff of Agere (AGR.A: up $0.05 to $5.05, Research, Estimates), which is now on track to be completed six months from the original Sept. 30 deadline. Lucent must now raise $5 billion in cash, up from the previous $2.5 billion, and must also achieve positive EBITDA for the fiscal quarter prior to the spin, the company said.
Bankers broadened Thursday the types of cash-raising actions that qualify for this condition. Lucent said it is well on its way to complete this condition through multiple financing actions, the company said.
"These revised covenants and conditions are definitely achievable, given reasonable market conditions," Lucent Chief Financial Officer Frank D'Amelio said. "Our Phase II business restructuring program will enable us to create a sharper, leaner Lucent, and will enable us to return to profitability and positive cash flow during fiscal year 2002."
JP Morgan Chase and Salomon Smith Barney arranged the credit facilities. 
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