Qwest amends $4 billion unsecured credit facility to loosen covenants, extend maturity

By Sara Rosenberg

New York, March 18 - Qwest Communications International Inc. announced on Monday that its amended its $4 billion unsecured credit facility to loosen covenants and extend the maturity. Bank of America was the administrative agent for the deal.

"The amendment is good for Qwest and the banks," said Robin Szeliga, Qwest executive vice president and chief financial officer in a company press release. "It lets us continue to reduce our debt and puts the liquidity issues to rest."

Under the amendment, the company ratio of debt to consolidated EBITDA was recalculated (see Table 1) from the original debt coverage limit ratio of 375%.

The amendment also allows the company to extend the maturity date on the credit facility from May 3, 2002 to May 3, 2003. According to the release, "the company presently expects to exercise its option to extend the maturity."

As part of the requirement for the amendment to become effective, Qwest Corp, a wholly-owned subsidiary of Qwest Communications, issued $1.5 billion 8.875% senior notes and used the net proceeds to repay lenders approximately $608 million, leaving about $3.4 billion in outstanding debt under the credit facility. Furthermore, the company has agreed under the amendment to use portions from future sales of assets and capital market transactions to repay borrowings until the loan is $2 billion or less.

The company is being charged an amendment fee of 25 basis points.

Available borrowings under the loan is believed by the company to be sufficient funds for the repayment of debt maturing in the next 12 months and to finance capital and operating costs within that same period.

Table 1

Qwest's New Debt Coverage Limits

Fiscal Quarter Ending Maximum Percentage

March 31, 2002 425%

June 30, 2002 425%

Sept. 30, 2002 425%

Dec. 31, 2002 400%

March 31, 2003 400%

Percentage is debt to consolidated EBITDA

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