Sprint has finally found a way to pay off
its short-term debt, securing an additional $1 billion to its $5 billion
credit facility, officials announced Friday.
The long-distance and wireless phone giant secured the nine-month loan by
putting its directory publishing business up for collateral with creditors
Citibank N.A. and Deutsche Bank AG.
Sprint also announced plans to cut overall capital spending in 2002 by $400
million, down from its projected $6.8 billion goals.
The loan extension is good news for the struggling company, which has seen
its stock plummet to three-year lows over fears Sprint would not be able to
find a money solution to its short-term debt.
Executives dodge a financial bullet that has already hit one other phone
carrier in the nation, Qwest Communications . The carrier
has spent the
past month looking for credit help to pay off $4 billion in short-term
debt.
Mark Bonavia, Sprint spokesperson, said the company would only withdraw
from their credit facility when needed, with the now-available funds used
to pay down near-term debt.
“This is a capital expenditure (CAPEX) cut, an across the board kind of
cut, with no specific areas or suspension in growth initiatives,” he
said. “It’s pretty straightforward.”
He also said cost-cutting measures will have no affect on its employee,
with no job cuts expected for the immediate future.
Also saving the company money is the inadvertent savings relief that comes
from the delay
in the Federal Communications Commission over wireless spectrum from the
once-defunct but now reborn NextWave Telecom.
Sprint had set aside funds in 2002 with the expectation it would have the
spectrum to boost its digital wireless phone business in the U.S.
Sprint put down an undetermined deposit to the FCC, which has so far refused
to return the money to spectrum buyers. Currently, the regulatory body
is trying to appeal a federal court ruling that said it had no right to
sell the spectrum off to the highest bidder and will make no decision on
deposits until a ruling comes back.
Sprint’s wireless phone division is where most of Sprint’s money problems
have stemmed to date, as the carrier competes with a suddenly-crowded field
of competitors for digital wireless phone subscribers while expanding it’s
coverage area.
Sprint executives still expect their FON and PCS division to become year
cash-flow positive sometime this year.
