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Technology Stocks : Lucent Technologies (LU) -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (17688)	2/16/2001 6:37:51 PM
From: A.L. Reagan	Read Replies (1) \| Respond to of 21876

02/16 16:26 Lucent's Schacht Gives Banks to End of Day to Lend (Update1) New York, Feb. 16 (Bloomberg) -- Henry Schacht, chief executive of Lucent Technologies Inc., said the biggest maker of telephone equipment would draw on a $2 billion back-up credit line unless its bankers agree by the end of the day to lend it $4.5 billion. ``We are asking for your help,'' Schacht said on a conference call with Lucent's bankers today. ``We don't want to do this but we are out of time.'' Drawing on the one-year backup line would force banks to lend as much as $2 billion they hadn't set aside. Lucent wouldn't have to provide any collateral, though it would have to repay the loans by Thursday, the day the line expires. Schacht issued the ultimatum -- with a deadline of 5 p.m. East Coast time -- because banks have been slow to respond to the company's request to renew the one-year line. J.P. Morgan Chase & Co. and Salomon Smith Barney are trying to arrange the renewal as part of a new $4.5 billion facility. Lucent also wants to amend a $2 billion five-year line due in 2003. Banks' reticence to lend comes after Lucent, rated ``A'' by Standard & Poor's just a few months ago, had its credit ratings cut to near junk status by both the major credit-rating companies because of recent disappointing results. The firm said last month it would cut 10,000 jobs within six weeks as part of seven-point plan to return to profitability. Schacht said James Dimon, Bank One's chief executive, had called to pledge a commitment, as had Kenneth Lewis, president of Bank of America Corp. A representative from Mellon Bank also pledged to renew its commitment in Lucent's one-year credit line while on the call. Downgrade If Lucent fails to renew the line, Moody's Investors Service said it would consider cutting the company's debt ratings to below investment grade. The credit-rating company earlier this week lowered Lucent's rating to one notch above junk, as did rival S&P. Schacht argued that Lucent had done everything it could to ensure that lenders would be ``adequately compensated'' for the new credit package. ``We have gone out of our way to put a responsible deal in front of you,'' he said. Lucent agreed to pledge its assets as security on the new $4.5 billion credit lines and its existing five-year line. The company has also agreed to pay a yield of 2 percentage points more than the London interbank offered rate, or Libor, almost twice that of similarly rated borrowers. Priority to Lenders It was also made clear on the call that Lucent would reward its lenders with future business, including roles on the upcoming initial public offering of its Agere Systems Inc. unit. The banks that commit would be ``priority firms going forward,'' Deborah Hopkins, Lucent's chief financial officer, said on the call. Lucent said that lenders could pledge their commitments by phone. Hopkins also noted that the $2.5 billion in commitments from J.P. Morgan and Salomon Smith Barney only held if the full $4.5 billion was raised from them and other banks. While Lucent seeks the new lines, Morgan Stanley Dean Witter & Co. is buying the company's commercial paper directly from the company as part of a $2.5 billion agreement to help the largest telephone-equipment maker fund its day-to-day operations. Morgan Stanley has agreed to take on the debt, then exchange it for shares as part of Lucent's planned $7.4 billion Agere IPO, which will be the second-largest IPO ever in the U.S. The investment bank was also awarded the sole lead underwriting position on the sale. quote.bloomberg.com -------------------------------------------------------- This looks like a "slippery slope" for Lucy. Schacht in begging mode unable to get credit at sub-prime rates. I think you value guys should wait at least until Debbie Hopkins issues the next profit warning. Reminds me of XRX when it was first in the 12's and value guys were wanting aboard.