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Strategies & Market Trends : Sharck Soup -- Ignore unavailable to you. Want to Upgrade?

To: JRI who wrote (12986)	3/23/2001 11:48:38 AM
From: Sharck	Read Replies (1) \| Respond to of 37746

Lucent Again Lowers IPO Price For Agere Unit in Tough Market By Dennis K. Berman Staff Reporter of The Wall Street Journal The market keeps saying "no," but Lucent Technologies Inc. is doing everything it can to get to "yes." For the second time in less than a month, the company has cut the offering price of the initial public offering of its Agere unit, which has had trouble winning backing in the treacherous market. Shares of the optoelectronics maker now will be priced from $6 to $7, instead of the previous range of $12 to $14, the company said in a filing Thursday. Lucent will sell 600 million shares, compared with the 500 million shares expected last week. If priced at the middle of the range, those shares would bring in $3.9 billion, down from the $6.5 billion previously anticipated. Lucent, Murray Hill, N.J., isn't alone. Amid the turbulent stock market, investors are forcing down IPO prices for the few companies that are daring enough to sell stock in IPOs. But "people are looking for a fire sale," said UBS Warburg analyst Nikos Theodosopolous of the Agere deal. "They are going to price it at whatever they can to get it done." Lucent needs the deal because it will help the company shore up its balance sheet by transferring and retiring debt. But under the new terms released Thursday, the offering will be less beneficial than originally envisioned. Though the company still will be able to transfer $2.5 billion in debt to Agere, it will get less from a complex arrangement with the deal's lead underwriter, Morgan Stanley Dean Witter & Co. Under the previous terms, Lucent would have retired an additional $2.3 billion in debt owed to Morgan Stanley, which would, in exchange, have received Agere shares (though Lucent has since reduced its debt to Morgan Stanley to $1.6 billion). Now, under the transaction's new terms, that swap is off. Morgan Stanley still will have the option of obtaining 90 million shares in an "overallotment," which allows an issuer to offer extra shares if demand is high. At the midrange price of $6.50, that reduced number would be still be used to cut Lucent's debt, but only by $585 million. With a separate $6.5 billion credit agreement recently obtained from banks, and a $2 billion cost-cutting plan that includes 10,000 layoffs, the company says liquidity isn't an issue. "We're already seeing positive results from our restructuring program," said spokeswoman Kathleen Fitzgerald. The conditions of those loans, however, is proving a threat to the company's plans for Agere. As explained in the revised IPO filing, Lucent was required by the lending banks to reduce debt by $2.5 billion (in addition to the $2.5 billion in debt that Agere will take on after the offering), or bring in cash of the same amount, before it could distribute Agere shares not sold in the IPO to Lucent shareholders. The company should be able to raise that through the sale of its fiber-cable business or other assets, but it must do so by the end of September. Meantime, credit analysts said they are keeping a watchful eye on the company. "They're bleeding, unquestionably," said Robert Konefal, managing director of telecommunications ratings at Moody's Investor Service. "If the deal proceeds on this basis, they would still be OK from a credit perspective. Frankly, the operating turnaround is going to be key." Lucent shares slipped 31 cents to $11.09 as of 4 p.m. in New York Stock Exchange composite trading Thursday