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Lucent to Raise $1.3B in Bonds

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5/28/2003

MURRAY HILL, N.J. -- Lucent Technologies (NYSE: LU) today announced a public offering of convertible senior debt expected to raise approximately $1.3 billion. The company expects to apply the net proceeds toward the repayment or possible repurchase of certain short- and medium-term obligations over time, as well as for general corporate purposes.

“This offering is part of our overall effort to strengthen the balance sheet and will provide us with added flexibility to retire or satisfy certain debt, preferred stock and other obligations at significantly lower interest rates,” said Lucent Technologies Chairman and CEO Patricia Russo.

Lucent Technologies Chief Financial Officer Frank D’Amelio pointed out that the proceeds from this offering were not included in the company’s previous cash projections. Any portion of the proceeds from this offering that is not used by Sept. 30, 2003, would have an incremental impact on the company’s year-end cash balance.

The offering, which will be made off of the company’s existing universal shelf registration statement, will consist of two series of debt with expected maturity dates of 2023 and 2025, as well as various preset dates when the securities may be redeemed at the option of either the holder or the company. Additionally under certain circumstances, the securities may be converted into Lucent common stock at a preset value that is expected to represent a significant premium over the stock’s current trading price.

The joint book-running managers for the offering are Citigroup Global Markets and JPMorgan. In addition, HSBC is a joint-lead manager for the offering.

In addition to the offering, Lucent today announced that it has entered into new senior secured credit facilities totaling $595 million. These facilities allow the company to issue up to $245 million in new letters of credit, renew up to $350 million of existing letters of credit, and secure certain other obligations. Under the terms of the facilities, Lucent may issue or renew letters of credit with a term of up to 12 months at any time during the availability period, which runs through Dec. 31, 2004. The facilities may grow as more banks enter the agreement and include certain financial covenants.

Lucent Technologies Inc.

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