Alcatel-Lucent Said to Seek Lower Rate on $2.1 Billion of Loans

Alcatel-Lucent SA (ALU), the telecommunications equipment and services provider, is seeking to reduce the rate on about $2.1 billion of loans it obtained in January, according to a person with knowledge of the deal.

Morgan Stanley, Credit Suisse Group AG and Deutsche Bank AG are arranging the transaction and will host a lender call tomorrow at 11 a.m. in New York, said the person, who asked not to be identified because the deal is private.

Alcatel-Lucent, which in June said it would sell 1 billion euros ($1.3 billion) of assets and lower costs by another 1 billion euros to stem losses to focus on businesses including ultra-high speed Internet, is seeking to extend maturities on its debt, the Paris-based company said in a statement yesterday. It sold $500 million of 8.875 percent notes due in January 2020 yesterday to repay some of its senior bank debt, according to the statement.

Alcatel-Lucent is seeking to reduce the rate on a $1.74 billion covenant-light C portion and a 298 million-euro D piece that remains under a credit pact that comes due in January 2019, the person said. Under the agreement, there’s also a $500 million term B that expires August 2016, according to data compiled by Bloomberg.

“This transaction is another step forward for Alcatel-Lucent in reprofiling our debt liabilities as we outlined in the launch of The Shift Plan,” Simon Poulter, an Alcatel-Lucent spokesman based in Paris, wrote in an e-mail. “Early successes in the debt reprofiling have left us with notes and bonds maturing in 2014 and 2015 of less than 450 million euros.”

‘Shift Plan’

On June 19 Alcatel-Lucent announced “The Shift Plan” to reposition itself from a telecommunications equipment generalist to an industrial specialist in IP Networking. The company said it would seek to refinance about 2 billion euros in debt between 2013 and 2015.

Alcatel-Lucent’s dollar-denominated debt pays interest at 6.25 percentage points more than the London interbank offered rate with a 1 percent minimum on the lending benchmark while the euro-denominated slice pays 6.5 percentage points more than the lending benchmark with a 1 percent floor, Bloomberg data show.

Covenant-light debt doesn’t have typical lender protections such as financial maintenance requirements.

To contact the reporter on this story: Krista Giovacco in New York at kgiovacco1@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net

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