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Agere spinoff delay seen
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July 24, 2001: 11:50 a.m. ET
Lucent says it may delay spinoff for six months, weighs secondary offering
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NEW YORK (CNNfn) - Lucent Technologies revealed Tuesday that it may delay the spinoff of its microelectronics unit, Agere Systems Inc., for six months.
The troubled telecom equipment maker is in talks with its bankers to amend the covenants under its credit facilities. The terms of such changes could postpone the spinoff of Agere, Lucent said Tuesday.
Murray Hill, N.J.-based Lucent, which failed in its $23.5 billion merger attempt with French networking firm Alcatel SA, must raise $2.5 billion by Sept. 30 to complete the spinoff of Agere Systems, which makes communications equipment. Lucent also is dealing with a heavy debt load, estimated at $5.4 billion as of March.
News of the spinoff delay came Tuesday as Lucent announced a wider-than-expected loss for its fiscal third quarter. The troubled telecom equipment maker said it will cut up to 20,000 more jobs and take a huge restructuring charge. Lucent also sold its-fiber optic unit for $2.75 billion to Furukawa Electric Co. of Japan and Corning Inc. (GLW: up $0.10 to $13.86, Research, Estimates).
News of the disappointing third-quarter results caused Lucent's (LU: down $1.37 to $6.53, Research, Estimates) shares to plummet nearly 14 percent Tuesday in late morning trading.
In a conference call, Lucent executives hinted that the Agere spinoff might not even happen and shareholders that are counting on getting more Agere stock as part of the spinoff may want to lower their expectations. Agere (AGR.A: down $0.76 to $6.24, Research, Estimates) Systems went public in March.
"The company may explore an alternative path for achieving full independence for Agere through a secondary public offering of the Agere shares held by Lucent if a change in the spin-off plan is in the best interest of its shareholders," Lucent said in a statement.
A spokesman declined to comment further but maintained Tuesday that Agere will remain an independent company. 
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