Lucent Shares Slump on Debt Concerns

Lucent Technologies Inc., struggling to turn itself around, saw its stock fall Monday to the lowest price in more than four years as the telecommunications equipment giant was seen drawing on its bank credit lines even as it cut its short-term debt.

Murray Hill, N.J.-based Lucent said brokerage Morgan Stanley exercised its option to buy 90 million shares of Lucent’s majority-owned Agere Systems microelectronics unit, which will allow Lucent to reduce its short-term debt by $519 million. Agere was partially spun off from Lucent last week.

Lucent, battered by aging products and intense competition as well as the slowing economy, announced a major restructuring in January when it reported a first-quarter operating loss of $1 billion. It cut its debt with the Agere IPO and last month gave itself more flexibility by negotiating $6.5 billion in bank credit lines.

The company transferred $2.5 billion of its debt to Agere in the IPO but raised only $3.6 billion in the transaction, barely half what it had planned.

The Financial Times, citing sources familiar with the company’s finances, reported Monday that Lucent has begun drawing on its bank credit lines, a move that suggests it may have used much of the $3.8 billion of cash it had on hand at the end of last year.

Lucent said the fact that it was drawing on its bank credit was not news. Still, worried investors sent Lucent shares down $1.14 to $8.83 on the New York Stock Exchange, the lowest since 1996. Credit-rating agency Standard & Poor’s last week warned it may cut Lucent’s debt to “junk” status.