Qwest ponders asset sales

Copyright 2002 The Deal L.L.C.
The Daily Deal...09/10/2002
From LexisNexis

Chris Nolter
From The September 10, 2002 Edition Of CED Broadband Direct

Qwest Communications International Inc. chief executive Richard Notebaert said Monday, Sept. 9, that the company is weighing options for 10 underperforming divisions, including closing or selling the units.

Notebaert echoed previous statements, saying Qwest aims to slash $1 billion in operating costs at some of its less productive units.

"I would expect to see meaningful impact in the December quarter," he said at a Morgan Stanley communications conference.

The telecom executive would not identify specific units, but said that the company does not expect them to produce sufficient long-term return on invested capital.

Qwest has taken several steps to reduce its $26 billion in debt and stave off the threat of bankruptcy in recent weeks. The company extended the repayment schedule for its $3.4 billion credit facility, reduced its debt limits, arranged a new $750 million bank loan and sold its Yellow Pages publishing unit for $7.05 billion.

In mid-August, Qwest said it might be able to make cuts by renegotiating service contracts with other telecom companies. Earlier, the Denver-based former Baby Bell said it was considering selling its wireless division and some of its access lines.

Notebaert would not discuss the possibility of a bankruptcy filing at the conference. Qwest shares and bonds have steadily climbed in the last few weeks and the company's market cap has risen steadily to $5.4 billion from $3.5 billion.

"That's a lot of market cap for there to be talk of bankruptcy," said one source who thinks a Chapter 11 filing is now unlikely.