Qwest renegotiates credit facility

After weeks of negotiations, Qwest Communications has amended its fully drawn $4 billion bank credit facility. The new agreement should make it easier for the company to avoid violating the covenant outlining its ratio of debt to EBITDA (earnings before interest, taxes, depreciation and amortization).

Under the agreement, at the end of the first three quarters of 2002 the company can now maintain a debt to consolidated EBITDA ratio for the trailing four quarters of not more than 4.25. At the end of the fourth quarter 2002 and first quarter 2003, the ratio cannot exceed 4.0. The previous limit was 3.75.

As part of the agreement, Qwest has used $608 million from the proceeds of a $1.5 billion senior note sale to repay the credit facility, which now has about $3.4 billion outstanding. The company also agreed to use a portion of the net proceeds from future asset sales and capital market transactions to repay the facility until it there is $2 billion outstanding or less.

--Toby Weber, staff writer