Lucent Beefs Up 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