Qwest to seek syndicate approval next week on restructuring of credit facility

By Sara Rosenberg

New York, Aug. 8 - Qwest Communications International Inc. has been negotiating with Bank of America, administrative agent, on restructuring its credit facility, including an extension of the term and increased covenant room, company officials said during a conference call Thursday. The company plans to begin obtaining approvals from the rest of the banks in the syndicate next week, officials added.

Furthermore, Banc of America Securities LLC has committed $200 million of a proposed $500 million senior secured credit facility for QwestDex Inc. "This new facility is contingent on, among other things, the bank group agreeing to amend our credit facility," officials said in the conference call. Banc of America will act as sole arranger and sole bookrunner for the bank loan.

Qwest is currently in late stage negotiations to sell all or part of QwestDex. If the sale is completed, the company would probably roll the new credit facility "into some sort of other security arrangement," company officials said. "[The facility] clearly wouldn't survive the sale of Dex, but that's a happy problem to have."

The Denver, Colo. telecommunications company anticipates being able to complete the new facility and the restructuring of its existing facility in the third quarter, according to a company press release.

"Now that we are cash flow positive, we believe that with the commitment we have received from our lead bank we will have sufficient resources to fund our operations in the near-term," company officials said. "Once we restructure our credit facility we believe that cash flow from operations and available debt financing will be sufficient to satisfy our liquidity needs for at least 12 months," the officials added.

For the second quarter of 2002, free cash flow totaled $320 million; capital expenditures were $618 million, down from $2.62 billion in the same period last year; adjusted EBITDA was $1.26 billion compared with adjusted EBITDA for the same period last year of $2.0 billion; and, the company's net loss was $1.14 billion or $0.68 per share, compared to a net loss of $3.31 billion or $1.99 per share in the second quarter of 2001.

As of June 30, Qwest was in compliance with financial covenants in its credit facility and its indentures.

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