Alcatel-Lucent is reported to be in talks with Goldman Sachs about a possible loan to help strengthen the financially troubled vendor's position.
Bloomberg cited people familiar with the situation as saying that the New York-based investment bank would grant Alcatel-Lucent funding of an undisclosed amount, while the Paris-based company would offer some of its assets as collateral.
The move follows reports last week that Alcatel-Lucent is considering the sale of parts of its patent portfolio to help its financial situation. Previous reports also suggested the company was seeking buyers for its submarine cable business and its enterprise telephony unit after reporting weaker sales and a wider net loss in the third quarter.
Bloomberg quoted people close to the situation as saying that the undersea cable and enterprise discussions are at a very early stage, and Alcatel-Lucent hasn't hired an investment bank to advise on the potential sales. Both assets may fetch less than €1 billion, the sources also noted.
According to Bloomberg, Alcatel-Lucent has burned through about €700 million of cash each year since the merger of Alcatel SA and Lucent Technologies. Current CEO Ben Verwaayen has found it tough to turn the company's fortunes around in a hard-fought market amid strong competition from Chinese vendors such as ZTE and Huawei.
Bloomberg noted that the €2 billion of debt due over the next three years is adding to the challenges, as sales remain weak and the difficult economic environment persists.
The telecoms equipment market generally is facing a slowdown in spending that has forced others, such as Nokia Siemens Networks, to consider selling off business units and cut jobs. Even Huawei posted a lower profit this year, reported Bloomberg, while ZTE posted a loss.
- see this Bloomberg article
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