French telcom equipment supplier Alcatel-Lucent (News 
- Alert) has confirmed multi-year financing from Credit Suisse AG and Goldman Sachs Bank USA. This asset-backed loan, announced on December 14, is for $2.13 billion in senior secured credit facilities.
Commenting on these initiatives, Ben Verwaayen, CEO at Alcatel-Lucent, said, “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.”
Proceeds from the new financing will be used to effectively extend the company’s maturity profile over the next several years, as well as provide additional flexibility to finalize previously announced Performance Program priorities, including the $1.65-billion cost reduction target.
Funding will also go toward the exiting or restructuring of unprofitable Managed Services contracts and geographic markets.
Verwaayen added, “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.”
Alcatel-Lucent USA, an Alcatel-Lucent subsidiary, will be the borrower and Alcatel-Lucent and some of its material subsidiaries will be the guarantors. The senior secured credit facilities, as contemplated, are expected to be denominated in U.S. dollars and in Euros, and will have maturities of 3.5 to six years.
It is expected that the facilities will be secured by, among other things, the intellectual property (IP) portfolio of Alcatel-Lucent.
The committed parties have the right to syndicate all or a portion of their respective commitments with respect to the financing, but may not assign their obligation to fund. Certain terms of the financing are subject to change in connection with such syndication, targeted to complete in January 2013
The commitment is subject to customary closing conditions, including the negotiation of definitive documentation regarding financing, and there not having occurred any material adverse change in our business.
In materials provided to lenders, Alcatel-Lucent targets a gross margin for 2015 in the range of 35 to 37 percent, and an adjusted operating margin of 6 to 9 percent. As of LTM Q3 2012, the company reported revenue and adjusted EBITDA of $19.15 billion and $909.18 million, respectively.
Meanwhile, French newspaper Les Echos has reported that the French government is concerned about Alcatel-Lucent's plan to use patents as collateral for a Euro 1.615-billion loan because the IP could fall into the hands of foreign banks, according to Reuters (News - Alert).
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Edited by
Braden Becker
