Telecom-equipment firm Alcatel-Lucent SA (ALU) has secured a debt financing deal worth 1.6 billion euros or about $2.1 billion with Credit Suisse Group (CS) and Goldman Sachs Group Inc. (GS), the Wall Street Journal reported, quoting people familiar with the matter. The new package is likely to be announced this morning.
Most of the funds will be secured by the company's U.S. assets, which include a portfolio of patents from the Bell Labs research arm and a data-networking business. Thus, if the company defaults, the lenders will have access to these assets before existing creditors. Credit Suisse and Goldman are said to have sought such a protection.
The cash infusion, along with cash on hand, is expected to enable Alcatel-Lucent to pay off debt maturities of 2-3 years. The new loans may have 5-year maturities.
It was reported by the WSJ earlier that Alcatel-Lucent was exploring the possibility of offering its Internet-routing business as collateral for up to 1 billion euros in loans. The company was also said to be considering pledging its valuable portfolio of patents from Bell Labs.
That report said while Alcatel-Lucent has ample cash on hand, it needs a bigger cushion to allay investors' concerns and also to avoid discouraging potential clients from entering into long-term deals. Only then will the company will have enough time to implement 1.25 billion euros in cost cuts, it said.
The stock fell 0.1 percent on Thursday to settle at 0.85 euros in Paris.
by RTT Staff Writer
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