Lucent Technologies Inc's proceeds from a sale of two plants won't help satisfy an agreement with banks to raise US$2 billion and complete the spinoff of its chipmaking unit, people familiar with the matter said.
The biggest US maker of telephone equipment, which has lost almost US$5 billion in the past year, has said it may sell factories in Columbus, Ohio, and Oklahoma City to contract manufacturers by October. A sale may yield US$600 million to US$900 million, the people said. Celestica Inc is the likely buyer, the Wall Street Journal reported earlier today.
Lucent decided to sell some of its plants in April 2000 to lower costs. That event came before Lucent secured a US$6.5 billion credit agreement in February, and any proceeds from a sale don't count toward meeting loan terms with banks, the people said.
Lucent needs US$2 billion to replace the value of its 58 percent stake in Agere Systems Inc, which is being spun off to shareholders.
"These are attractive bus-inesses and our plans are moving apace," said Lucent spokeswoman Mary Lou Ambrus. She declined to comment on the Journal report.
The Murray Hill, New Jersey-based company wants to sell its optical fiber and cable business, which analysts expect to fetch about US$4 billion. The cash from this sale, should it go through, may be used to complete the spinoff because the decision to sell was made after the lending accord.
Lucent is in talks with several bidders interested in the fiber and cable business, Ambrus said.
The prices offered for the fiber unit have slid in the past month as demand for optical fiber and cable waned and bidders capitalized on Lucent's need to sell the business before it completes the Agere spinoff, analysts said.
Lucent also may consider raising as much as US$2 billion in cash through other transactions, the people said. If it does, that may ease pressure to come up with the money before the self-imposed Sept. 30 deadline for the Agere spinoff and help Lucent bargain for a higher price for the fiber business, those people said.
Among the options Lucent is reviewing is a sale of about US$1 billion in convertible preferred stock. Lucent also may sell shares in its Agere unit, they said.
Shares of Lucent fell 14 cents to US$5.85. They have dropped 90 percent in the past year and on Wednesday touched US$5.04, a record low for AT&T Corp's former equipment unit. Agere, which first sold shares to the public in March, rose US$0.06 to US$5.41.
An announcement of a sale, either to Toronto-based Celestica or two other unidentified bidders, isn't expected for a few weeks, the Journal reported.
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