Lucent Beefs Up Credit Line

Lucent Technologies Inc. (NYSE: LU) has beaten a deadline to obtain $6.5 billion in credit (see Lucent Secures $6.5B Credit Line).

CEO Henry Schacht and CFO Deborah Hopkins had been working hard to obtain the credit, which was needed to back up Lucent's cash reserves (see Lucent Restructuring: Mixed Bag).

Lucent says it already had cash on hand of about $3.8 billion as of December 31. But it needed more in order to improve its liquidity and help meet the costs associated with its seven-point restructuring plan. That plan, outlined by Schacht in January (see Lucent Loses $1 Billion, Plans Big Layoff), includes slashing expenses, eliminating product lines, and expanding its reliance on contract manufacturers to reduce headcount.

The transactions announced today include Lucent's procurement of $4.5 billion in a 364-day credit facility from undisclosed banks. This part of the transaction was arranged by J.P. Morgan & Co. (Nasdaq: JPM) and Salomon Smith Barney. It includes $2 billion in a new credit line that replaces one that expired this week. It also includes $2.5 billion of debt that will be assumed by Agere Systems when it goes public later this year (see Agere Aims for $8.5 Billion IPO).

Lucent also revised an existing $2 billion facility to bring it into line with the rest of the credit transactions. "We now have one cohesive package," a spokeswoman says. "These cash reserves will provide liquidity as we execute our turnaround."

-- Mary Jander, senior editor, Light Reading http://www.lightreading.com