Agere pays down debt

Agere Systems broke into its cash hoard to repay $1 billion of $2.5 billion in debt assumed when the company was spun off from Lucent Technologies. Besides improving Agere’s balance sheet, the move let Agere renegotiate some terms on the remaining $1.5 billion of its credit facility.

Bank lenders, led by J.P. Morgan Securities and Salomon Smith Barney, extended the maturity date of the $1.5 billion facility to Sept. 30, 2002, from Feb. 31, 2002. If Agere raises at least $500 million from public or private debt or equity transactions before Sept. 30, 2002, the maturity date for a portion of the $1.5 billion will be pushed out to 2004.

As part of the new agreement, Agere must meet new benchmarks for net worth and liquidity and hit quarterly EBITDA targets, including becoming EBITDA positive by the September 2002 quarter. The company also will face limits on capital spending.

According to Agere treasurer John Gamble, the new agreement will provide the liquidity and financial flexibility to see the company through its restructuring program, scheduled to be completed by March 2002.

As of June 30, Agere had $3.3 billion of cash on its books. Gamble said Agere wouldn’t be reducing its debt level below the remaining $1.5 billion.

--Vincent Ryan, senior editor