Troubled phone giant Qwest to sell yellow pages directories division for more than $7 billion
Tuesday, August 20th 2002, 12:00 am
By: News On 6
DENVER (AP) _ Cash-strapped Qwest Communications International Inc. will sell its yellow pages business for more than $7 billion to a group of financiers.
Qwest announced Tuesday it had agreed to sell the unit, QwestDex, in a two-stage transaction to the Carlyle Group and Welsh, Carson, Anderson & Stowe.
Qwest shares soared 27 percent on the news, rising 61 cents to $2.85 in early trading on the New York Stock Exchange.
The split transaction was designed to speed cash to Qwest. The Denver-based telecommunications provider, the local phone company in 14 Western states and a leading long-distance provider, expects to use the proceeds from the sale to pay down debt and to fund other company operations.
``The sale of QwestDex is a significant part of our plan to deliver and strengthen our balance sheet and will allow us to focus on maximizing the profitability of our core operations,'' said Richard C. Notebaert, Qwest's chairman and chief executive.
Qwest has been under heavy pressure to sell QwestDex or other assets to unload some of its $26.6 billion in debt to avoid violating loan terms that place a ceiling on its total debt.
Other non-core assets that may be sold include Qwest's wireless business, access lines and possibly cell towers.
Qwest reportedly is trying to reach a settlement with the Securities and Exchange Commission, which is investigating how the company accounted for $1.1 billion in revenue over several years.
The company acknowledged earlier this month that it discovered accounting mistakes from 1999 to 2001 and expects to restate financial results for 2000 and 2001.
Qwest has 55,000 employees overall, with 2,600 of those working in the QwestDex division, spokesman Chris Hardman said. He said whether any QwestDex employees will lose their jobs is up to the buyer.
The directory unit generated $1.6 billion in revenue last year.
The first stage of the deal _ involving the sale of QwestDex operations in Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota and South Dakota _ is for $2.75 billion and is expected to close in the fourth quarter of 2002.
The second phase _ which includes Arizona, Idaho, Montana, Oregon, Utah, Washington and Wyoming _ is for $4.3 billion and is expected to close in 2003.