Lucent Technologies Inc., which is struggling to recover from massive losses and internal cutbacks, Friday announced that it has lined up US$4.5 billion in new credit lines and secured another $2 billion in available financing to replace an existing credit agreement.
The beleaguered vendor of telecommunications and networking equipment said the new credit lines are tied to a seven-point restructuring plan that it detailed last month while reporting that it lost more than $1.02 billion from continuing operations in its fiscal first quarter ended Dec. 31. The credit deals will give Lucent needed financial liquidity as it tries to get back on a growth track, said a company spokeswoman.
Jim Kelleher, an analyst at Argus Research Corp. in New York, said Lucent needs new financing to fund its day-to-day operations and keep product development activities from slowing down. Closing on the credit deals was "crucial" to the company's attempt to turn itself around, Kelleher said.
Lucent said $2 billion of the $4.5 billion worth of new credit will replace a funding agreement that expired yesterday, while the remaining $2.5 billion will be assumed by a spin-off of its microelectronics business called Agere Systems when that company goes public. The separate $2 billion credit line represents an amendment of an existing deal that's due to expire in 2003, Lucent added.
As part of its restructuring plan, Lucent is laying off 10,000 workers and closing two manufacturing plants. The company has been hit hard by a slowdown in capital spending by telecommunications companies, with revenue from continuing operations dropping 26 percent in its fiscal first quarter on a year-to-year basis.
Lucent also ousted former CEO Richard McGinn in the fall and then was forced to restate its financial results for the previous fiscal year by cutting $679 million from the revenue total it originally reported. That has prompted the US Securities and Exchange Commission to examine the company's revenue reporting practices.