Lucent Credit Rating Decline Over for Now
Aug 17 2001
NEW YORK, Aug 17 - The punishing decline i Lucent Technologies Inc.'s <LU.N> credit ratings is over fo now, according to the three leading U.S. rating agencies.
On Friday, Moody's Investors Service affirmed its "Ba3" senior long-term debt rating, its third highest junk grade, fo the Murray Hill, New Jersey-based telecommunications equipmen supplier, with a negative outlook.
Fitch, meanwhile, said it is no longer considering a cu for its equivalent "BB-minus" rating, though it retained negative outlook.
On Thursday Standard & Poor's affirmed its own "BB-minus" rating for the debt, with a stable outlook.
The actions follow Lucent's announcement on Thursday tha it received approval from its banks, led by J.P. Morgan Chase & Co. <JPM.N> and Citigroup Inc. <C.N>, to amend its $4 billio loan package. This will allow it to proceed with a massiv restructuring package involving a fourth-quarter charge of u to $9 billion, the spinoff of its Agere Systems Inc. <AGRa.N> optical components unit, and up to 20,000 job cuts.
They also mean Lucent will enjoy some credit ratin stability for the first time since last autumn, when th company's then medium investment-grade ratings began to com under pressure as the company struggled with a slump in deman for telecom equipment.
"Over time, we expect our ratings will improve," sai Lucent spokesman Frank Briamonte on Friday. "Now that we hav the green light to execute Phase II of our restructuring plan we expect to be able to continue with our program to retur Lucent to profitability during 2002."
All three rating agencies said Lucent still suffers fro constraints in its financial flexibility as it seeks to becom leaner. Moody's, for one, said it seeks "evidence of a recover of revenue growth" before revising Lucent's outlook to
"stable."
Two weeks ago Lucent received an infusion of nearly $1. billion from a sale of convertible preferred stock carrying a 8 percent dividend.
Lucent shares closed Friday on the New York Stock Exchang at $6,34, up 2 cents. They have fallen 86 percent in the las year.
Its 7.25 percent notes maturing in 2006 were offered Frida at about 87 cents on the dollar, with a yield to maturit topping 10.7 percent.