Lucent Technologies, the biggest US maker of telephone equipment, yesterday pleaded with banks for an immediate loan of $4.5 billion (€4.92 billion) to avoid drawing on a back-up line of credit.
"We are asking for your help," Mr Henry Schacht, chief executive of Lucent Technologies said on a conference call with Lucent's bankers today. "We don't want to do this but we are out of time."
Bloomberg News reported that drawing on the one-year back-up line would force banks to lend as much as $2 billion they hadn't set aside. Lucent, which has a major investment in Ireland, would not have to provide collateral, though it would have to repay the loans by February 22nd, the day the line expires. It employs 700 people in the Republic but is cutting its workforce by 6 per cent in a global restructuring plan.
Mr Schacht issued the ultimatum because banks had been slow to respond to the company's request to renew the one-year line. J.P. Morgan Chase & Co. and Salomon Smith Barney were trying to arrange the renewal as part of a new $4.5 billion facility. Lucent also wants to amend a $2 billion five-year line due in 2003.
If Lucent fails to renew the line, Moody's Investors Service said it would consider cutting the company's debt ratings to below investment grade.
Lucent agreed to pledge its assets as security on the new $4.5 billion credit lines and its existing five-year line. The company has agreed to pay a yield of two percentage points more than the London interbank offered rate, or Libor, almost twice that of similarly rated borrowers.
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