Qwest Amends $4-Billion Bank Credit Agreement
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Scrambling to relieve a cash crunch, Qwest Communications International Inc. said Monday it had amended its $4-billion bank credit agreement to allow it to carry a higher percentage of debt on its books.
The Denver-based company, the dominant local phone company in 14 states from Minnesota to Washington state, whose accounting practices are the subject of a preliminary probe by the Securities and Exchange Commission, said it has enough cash and borrowings under its credit pact to pay debt maturing in the next 12 months and to fund its capital and operating expenses.
Under the amended bank credit agreement, Qwest is allowed a maximum debt-to-cash-flow ratio of 4.25 through Sept. 30. It must lower that ratio to 4.0 in the following two quarters.
Without the amendment, Qwest ran the risk of defaulting on the previous limit of 3.75, analysts said. Its total debt stands at about $25billion.
Although Qwest won more breathing room, analysts said the company faces several long-term challenges, such as the SEC probe, weak investor confidence and slim revenue growth.
Shares of Qwest closed at $9.01, up 33 cents, or 3.8%, on the New York Stock Exchange. The shares have plunged about 77% over the last 12 months.
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