Lucent, the US telecoms firm which employs 800 staff in the Republic, has bought back $275 million (€282 million) of its convertible preferred stock at a price far below face value, in a move that may make it easier to manage its debt.
The company also said it had posted a 10th successive quarterly loss of $2.88 billion for the quarter ended September 30th and it would reduce its workforce to 35,000 from 47,000 by the end of fiscal 2003. But no guidance was released on where jobs would go.
Staff at Lucent's Irish operations were invited to listen to a broadcast from chief executive Ms Patricia Russo last night. The firm's operations in Dublin act as a European hub for Lucent and generated turnover of $562 million during 1999, according to figures seen by The Irish Times.
But Lucent has been hurt by the downturn in the telecoms industry and is struggling to generate cash to meet long-term debt obligations worth some $6.8 billion.
Lucent chief financial officer Mr Frank D'Amelio said yesterday the company had issued 58 million shares of new common stock in exchange for $175 million of its 8 per cent convertible preferred stock maturing in 2031. It later exchanged 38 million more common shares for an additional $100 million of preferred stock.
"The current trading levels of these securities presented an opportunity to redeem them at well below their face value," he said on a conference call. "This is a prudent risk mitigation strategy. Considering the difficult market environment, we did not use any cash for these redemptions."
Mr D'Amelio said $1.6 billion of the preferred stock remained outstanding but declined to say if Lucent planned more buybacks.
Lucent ended the quarter with $4.4 billion in cash, but expects to have more than $2 billion by next September 30th. But it has about $6.8 billion of long- and short-term debt and convertible securities outstanding currency.
Lucent may have to buy back the rest of the 8 per cent preferred stock in August 2004 at face value for cash or common stock. Traders yesterday quoted the preferred stock down 24 cents on the dollar.
"The company needs to keep its debt position down," said Mr Jeff Seidel, global head of convertible research at Credit Suisse First Boston. "If they chip away at the ultimate redemption amount and do negotiated buybacks at prices below where they might be redeemed, that's intelligent."
- (Additional reporting by Reuters)
