Qwest funding tender offer with cash, plans to cut debt by $3.5 billion over 12 months

By Lisa Kerner

Charlotte, N.C., March 11 - Qwest Communications International Inc. said it is using cash balances to fund its previously announced offer to purchase all $1.2 billion of two outstanding debt securities.

The offer is part of the Denver-based telecommunications company's plan to reduce its debt by $3.5 billion over the next 12 months, which would put the company in a better position for investment-grade consideration, according to a Qwest spokesperson.

Qwest said its strategy is to refinance its regulated debt (Qwest Corp.) and pay off its unregulated debt (Qwest Communications International and Qwest Capital Funding).

On Wednesday Qwest announced it had obtained early tenders for $959.5 million total of notes in its offer for $402,923,000 of 7.9% notes due 2010 and $800.98 million of 7¼% notes due 2011.

As previously reported, Qwest obtained tenders for $338 million, or about 84%, of the 7.9% notes and $621.5 million, or roughly 78%, of the 7¼% notes.

The offer began on Feb. 24 and is scheduled to expire at 5 p.m. ET on March 24.

The consideration for each $1,000 of notes tendered and accepted is $996.25 for the 7.9% notes and $1,016.25 for the 7¼% notes. Those who tendered by 5 p.m. ET on March 9 also received an early participation payment of $30.00 per $1,000 of notes.

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