Qwest asset sale rumors go up in smoke
The rumored sale by Networx contract holder Qwest Communications International Inc. of its long-haul network is, as suggested by telecom analyst Warren Suss, “mere speculation.”
The company this week won a contract modification under the General Services Administration’s Networx Enterprise telecom contract to offer Managed Trusted IP Services to federal agencies.
But if the sale rumors proved without substance, the consequences of the company’s heavy debt —about $13.7 billion in consolidated debt, with $5.1 billion coming due over the next three years — in the current economic environment are all too real and weighty.
Qwest on Monday issued a warning that its 2009 first-quarter earnings “will be modestly lower than consensus analyst estimates.” First-quarter earnings are scheduled for release April 29.
The company also said it would offer $300 million — raised Tuesday to $810.5 million — in debt securities, with proceeds to be used to pay off existing debt, and to fund and refinance investments in its telecom assets.
By late Tuesday, the deed was done, through lead manager J.P. Morgan, according to the Wall Street Journal.
And Qwest announced that it had refinanced the debt, now due May 1, 2016, at an annual interest rate of 8.375 percent.
The discounted 7-year notes were priced at 92.5 percent of par: $750 million, and, according to the Wall Street Journal, given a low rating by Standard & Poor’s Ratings Service.
Qwest of Denver ranks No. 51
on Washington Technology's 2008 Top 100
list of the largest federal government prime contractors.
Sami Lais is a special contributor to Washington Technology.