Qwest amends $3.4 billion credit facility; QwestDex completes $750 million term loan

By Sara Rosenberg

New York, Sept. 4 - Qwest Communications International Inc. amended its $3.4 billion credit facility with the unanimous consent from all 29 lenders in its syndicate. Furthermore, the company obtained a new $750 million term loan for QwestDex Inc.

Under the amendment, Qwest extended the maturity of its facility to May 2005 from May 2003. Financial covenants were relaxed, increasing the maximum debt to consolidated EBITDA ratio to 6.0 times through maturity from 4.0 at the end of 2002. Stock of Qwest Corp. was pledged as security for the existing facility and secondary liens on the stock and certain assets of QwestDex were granted.

Also under the agreement, Qwest is required to use a portion of the proceeds from phase one of the QwestDex sale to pay down the facility to $2 billion and from phase two of the sale to pay down the facility to $1.25 billion.

Banc of America Securities LLC, J.P. Morgan Securities Inc. and Wachovia Securities, Inc. acted as joint book runners for the amended credit facility.

QwestDex's new $750 million term loan matures in 2004 and has an interest rate of approximately 14%, sources close to the deal said. Banc of America acted as sole lead arranger and sole bookrunner on the deal. Security is a lien on the stock and certain assets of QwestDex and a secondary lien on Qwest Corp. stock.

Qwest is required to pay down this new term loan for its subsidiary by the completion of phase two of the sale of QwestDex, which is expected in 2003.

"We're very pleased to take these additional steps to strengthen the company's financial position," said Oren Shaffer, vice chairman and chief financial officer of the Denver. Colo. telecommunications company, in a news release. "Coupled with the pending sale of QwestDex, these actions announced today and the cash flow from our operations should provide us with enough funding for the next several years, and put any liquidity concerns behind us."

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