May 23, 2001 (The Star-Ledger - Knight Ridder/Tribune Business News via COMTEX)
-- Alcatel and Pirelli are the only bidders still interested in buying Lucent
Technologies Inc.'s optical fiber business, according to an executive directly
involved in the deal.
The executive said offers are expected to be about $4 billion, significantly
less than the $7 billion cash-strapped Lucent had hoped the unit would fetch,
and $1 billion less than suitors reportedly offered in the first round of
bidding last month.
The bidding on the fiber optic business should be completed by the end of the
month, according to the executive. Five companies had bid early in the process.
In addition to Pirelli S.p.A and Alcatel S.A., they were JDS Uniphase Corp.,
Furukawa of Japan and Corning Inc. General Electric Co. had expressed interest
in the division but didn't join the second round of bidding.
Lucent officials declined to comment yesterday.
In a separate but related development, Lucent and Alcatel continued merger
negotiations, according to bankers tracking the talks. Lucent, which lost nearly
$4 billion in the most recent quarter, needs cash so badly that the sale of the
Georgia-based optical fiber business will happen regardless of a Lucent-Alcatel
merger.
The optical fiber deal and a possible merger with Alcatel are likely to be on
the agenda this week when Lucent's board of directors meet in a conference call.
Frank Dzubeck, president of Communications Network Architects, a computer and
communications industry analyst firm, said "Lucent has to sell fiber no matter
what" to satisfy terms of a $6.5 billion bank loan it signed in February.
The unusually stringent loan package was secured with company assets --
including $2 billion in assets of Agere, which it is in the process of spinning
off. To complete the spinoff of Agere, the company must come up with $2 billion
by Sept. 30, but the money can't come from operating revenues.
Without the $2 billion, Lucent will owe taxes on the Agere spin- off, making its
financial situation even stickier.
Then there are the banks to contend with.
"If they don't, for any reason, satisfy the banks' requirements by Sept. 30,
then we would have doubts as to whether the banks would renew the revolver next
February," said Bruce Hyman, a Standard & Poor's director responsible for
communications equipment.
Lucent's shares were unchanged at $9.90 yesterday.
By Ellen Simon
To see more of The Star-Ledger, or to subscribe to the newspaper, go to nj.com
(c) 2001, The Star-Ledger, Newark, N.J. Distributed by Knight Ridder/Tribune Business News.
-0-
(Public Company & Wall Street & Business & High Tech)
A service of the Financial Data Cast Network (FDCN) and
Window On WallStreet Inc. |
