Qwest to contest bondholders' suit, refuses negotiations

New York, Dec. 6 - Qwest Communications International Inc. said it plans to fight a bondholders' suit relating to its recently announced debt exchange offer and added that it will not be negotiating with the investors who filed the legal action.

Qwest added that it considers the claims to be without merit and plans to file a motion to dismiss the complaint.

Qwest last month announced an exchange offer for up to $12.9 billion principal amount of outstanding Qwest Capital Funding bonds. The Denver telecommunications company said it would offer up to $4 billion face amount of new senior subordinated secured notes of its Qwest Services Corp. subsidiary and an as yet undetermined amount of new Qwest Communications paper.

The private placement exchange will expire on Dec. 20, subject to possible extension.

At the time, some bondholders protested the move and held conference calls to discuss organizing opposition.

Now Qwest says a complaint has been filed in the U.S. District Court for the Southern District of New York.

The complaint alleges Qwest is breaching its fiduciary duties and duties of good faith and fair dealing, the company said. It seeks injunctive relief, costs and monetary damages.

In addition, Qwest said it has received a letter from a law firm asking it to start negotiations with the complainants to restructure its balance sheet and extend the expiration date for the exchange by 60 days.

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