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Technology Stocks : Alcatel (ALA) and France -- Ignore unavailable to you. Want to Upgrade?

To: zbyslaw owczarczyk who wrote (3415)	6/6/2001 6:48:16 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 3891

LPC-UPDATE 1 Alcatel aiming for Lucent fibre optic short-list Reuters, 06/06/2001 12:40 (Adds details of Alcatel loan, banker and analyst comments) By Tessa Walsh LONDON, June 6 (LPC) - French telecom equipment group Alcatel (SBF:CGEP) is still in the race to buy the fibre-optics unit of U.S. peer Lucent Technologies (NYSE:LU), and expects an announcement on the first stage of exclusivity within a week, bankers close to the company said on Wednesday. Lucent, which is under pressure to repay a $2.0 billion loan by the end of September, is preparing to short-list bidders with the aim of completing the sale by the end of the month, bankers said. "Alcatel is still bidding. There will be an announcement on exclusivity by the end of the week," a banker said, while others said that the U.S. tech giant would narrow down bids next week. Although Lucent has been forced to mull other fundraising options in the wake of its failed merger with Alcatel (NYSE:ALA) last week, bankers say the looming September deadline is pushing Lucent into a quick sale of its fibre-optics unit. "It's in Lucent's hands, but they're in a corner and will go with whoever offers the best price," a banker said. Bankers now expect the fibre-optics business to sell at the lower end of a $4.0-8.0 billion price range. Alongside Alcatel, bankers say Italian cables and tyres maker Pirelli (MILAN:PIRI) is still seen as a strong contender, despite its denial of a bid last week. "We understand that there are not many (bidders), we think that only Alcatel and Pirelli are looking," a banker said. Bankers say cash-rich Pirelli may have the financial edge over the French group, and may also have the upper hand if the bids are tied, as the failed merger talks have strained relations between the former partners. However analysts see Alcatel's proximity to the giant in its recent merger talks giving it the advantage, as Alcatel may have negotiated compensation. "We assume that as the merger talks advanced they (Alcatel and Lucent) had side talks on the fibre-optics unit, in the case that the talks should collapse," said a London analyst who declined to be named. "I think they (Lucent) may be forced to compensate Alcatel for the advanced talks that they got into," he added. Alcatel, which will finance the purchase of the fibre-optics unit with a five billion euro loan, may have incurred costs on a larger loan facility of up to 15 billion euros which was to have financed the merger. Earlier reports put Alcatel's fibre-optics unit loan at seven billion euros, but bankers say the purchase price is coming down, which will reduce the overall debt requirement. DEBT DEADLINE LOOMS A $6.5 billion loan, which extended a debt lifeline to Lucent in February as the company posted heavy losses, includes the stipulation that the company must raise an additional $2.0 billion by September 30. Failure to do so will result in the collapse of Lucent's spin-off of Agere Systems Inc (NYSE:AGR.A), the microelectronics unit in which it still holds a 58 percent stake, and may also force it to renegotiate its secured bank loans at a punishing rate of interest. Lucent, which opted to go it alone after disagreeing with Alcatel on the structure of a combined company's board and management control, now faces a long hard slog to profitability. Bankers say Lucent's problems may still not entirely be solved by the fibre-optics sale. "There is going to be a difference between the sale date and the date of funds," a banker said, adding that monopoly issues may also delay the sale. A sale, however, will give Lucent some bargaining power with its bankers, who may be prepared to be more flexible if the fibre-optics unit sale has been completed. (Additional reporting by Sophy Tonder in Paris) Copyright 2001, Reuters News Service