Lucent loan includes strings

(Telephony) As a condition of its recent $6.5 billion loan deal, wounded telecommunications equipment provider Lucent Technologies agreed with lender banks to limit its losses through the next three quarters to $2.35 billion.

A Securities and Exchange Commission filing released yesterday outlined the terms of the loan. According to the filing, the losses will exclude Lucent’s $1.6 billion restructuring charge, nonrecurring expenses and gains, accounting changes and the financial results of its microelectronics business spin-off Agere.

Additionally, the filing stated that losses would be calculated before interest, taxes, depreciation or amortization (EBITDA).

“We’ve negotiated terms and conditions that allow us to execute our comprehensive restructuring program,” said a Lucent spokeswoman. “The important thing is that we have the liquidity and flexibility to execute our turnaround plan…and the banks have given us achievable performance targets.”

Lucent is required to show improvements during the nine remaining months of fiscal 2001 and continue to show improvements in following years.

Also under the terms of the loan, Lucent’s total net value cannot fall below $23 billion. The spokeswoman said that the company’s net worth is “comfortably above” the condition spelled out in the agreement.

As of September 2000, Lucent’s net worth was $26.17 billion, with a market capitalization of $42.85 billion.

The loan comes on the heels of the company’s recent credit-rating downgrade to one notch above junk status. Both Moody’s Investor Service and Standard & Poor’s demoted Lucent’s status after it reported a $1.7 billion loss last quarter.

As collateral, a Lucent spokeswoman said the company offered “company assets” but declined to itemize what the assets are.