Lucent amends credit facilities

Lucent Technologies has successfully renegotiated its credit facilities, giving the company more financial breathing room as it moves on to the second phase of its restructuring program.

Under the renegotiated facilities, Lucent’s financial covenants, including EBITDA and net worth requirements, have been eased. The changes allow the company to advance with its restructuring plan by recording up to $9.7 billion in charges related to its fiscal fourth quarter asset write-offs and the most recently announced layoff of 20,000.

Lucent would not have been able to record these charges without violating the financial covenants of its $4 billion credit facilities, which the company uses to fund general operating expenses.

“We didn’t have the ability to take this charge and now we do. That’s the biggest key on the phase II side,” said a company spokesman.

Other changes in the credit facilities include increasing the amount of cash— from $2.5 billion to $5 billion—that Lucent needs to raise outside of operations to complete the spin-off of Agere. The company, however has already arranged for $5.1 billion in funding through a convertible preferred stock offering, the sale of its fiber unit and a debt for equity swap performed earlier this year, said the spokesman. Lucent also agreed that it must achieve positive EBITDA during the quarter prior to the Agere spin-off.

Lucent now expects the spin-off to be delayed up to six months from the original Sept. 30 timeframe.