Qwest looking to renegotiate bank facility

In the first of its weekly investor conference calls, Qwest Communications chairman and CEO Joe Nacchio declared that renegotiating the carrier’s bank facility is the top short-term priority for company leaders.

Qwest was forced to turn to the $4 billion facility earlier this month when it was effectively cut off from the commercial paper market. The move prompted several debt-rating downgrades amid liquidity fears.

The company has begun preliminary discussions with the lending banks and soon should begin detailed negotiations. The negotiations could result in revised covenants, the creation of a new facility or an extension of the current facility, which expires in May 2003.

“We believe early next week we will start in working through the types of changes to our facility that would make sense for our banks and for Qwest,” said Robin Szeliga, the company’s chief financial officer.

While Qwest didn’t specify which covenants might be addressed, of particular concern to analysts is the EBITDA-to-debt ratio the company must maintain in 2002 to stay in accordance with its bank facilities. The company is taking multiple steps to ensure that it does not violate that or any other covenant, Szeliga said.

According to Nacchio, the negotiations will let Qwest and its lenders address their specific concerns and desires.

“There are some things we’d like to see different,” he said. “This probably goes along the lines of a negotiated agreement to a different facility. We’d probably get some things we want, they’d probably get some things they want, including probably a higher interest rate than they’re currently getting from us under this facility.”

Also during the conference call, Nacchio updated the company’s in-region long-distance approval efforts. In April, the company likely will file multiple applications with the FCC for Section 271 relief, he said.