Alcatel-Lucent scores $2.1B loan to bolster finances
After weeks of speculation about how it would bolster its finances, Alcatel-Lucent (NASDAQ: ALU) said it is receiving a $2.1 billion loan from investment banks as the vendor looks to sell assets and cut costs.
Alcatel-Lucent confirmed that Credit Suisse and Goldman Sachs are providing the financing for the secured credit facilities. The company said that the loan will be backed up by its portfolio 29,000 patents, among other assets, and that the transaction is expected to be completed in January. The firm will use the loan to pay off debt matures and shore up its balance sheet in a bid to reassure investors and customers alike about its solvency.
"Today's announcement of a multi-year financing commitment allows Alcatel-Lucent to operate and adapt our business in a manner which is appropriate in today's markets," Alcatel-Lucent CEO Ben Verwaayen said in a statement, adding, "We will take advantage of the flexibility provided by this new financing in order to aggressively look at all options to drive long-term sustainable profitability, enhance our strategic positioning and improve our balance sheet."
The loan comes as Alcatel-Lucent is moving through a major cost-cutting initiative, known as its "performance program," which seeks to cut $1.63 billion in costs by the end of 2013. At the same time, the vendor is considering asset sales to boost its cash.
According to Bloomberg, which cited a document published today on the company's website, Alcatel-Lucent is considering asset sales to raise between $1.3 billion and $1.96 billion. The report, citing unnamed sources, said that the vendor's undersea fiber optic cable unit and its enterprise equipment division could be put up for sale. Alcatel-Lucent CFO Paul Tufano said in November that the firm might consider a sale of some of its non-core patents.
Under the performance program, Alcatel-Lucent will cut 5,550 jobs to save on costs. The vendor posted a net loss for the quarter of $189 million, a sharp downturn from its profit of around $251 million in the year-ago period, when the company benefited from a one-time tax gain. Overall sales in the third quarter were down 2.8 percent year-over-year to $4.66 billion.
- see this release
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see this Reuters article
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