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Archive for Saturday, March 2, 2002

Sprint seeks to improve financial flexibility

Firm gets loan offer, checks directory value

March 2, 2002

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— Sprint Corp. on Friday announced it had obtained a $1 billion loan commitment and hired investment firms for advice on what its directory publishing business may be worth in a sale.

The moves were intended to improve the telecommunications company's financial flexibility, said Arthur B. Krause, Sprint's executive vice president and chief financial officer.

"Our objective is to optimally manage our capital structure and maintain strong liquidity," Krause said. "Our hope is that the market will again focus on the fundamentals of our businesses."

Sprint, the nation's third largest long-distance carrier, said it had signed a letter of intent with Citibank NA and Deutsche Bank AG for a $1 billion, nine-month loan. The loan was secured by the assets of Sprint's directory publishing business and equals the net new cash requirements for the company for the entire year.

Sprint also hired Deutsche Banc Alex. Brown Inc. and Salomon Smith Barney Inc. to "explore values that Sprint could obtain if it were to sell the directory publishing business."

Kevin Calabrese, telecommunications analyst at Argus Research in New York, said the moves by Sprint boost its liquidity but may have been unnecessary.

"It means that the bankers and the markets have recognized that Sprint is not a company that should have any questions about its viability," Calabrese said.

Sprint has been swept along in a decline in stock prices in the telecom industry. The company has laid off 6,000 employees and 1,500 contractors in recent months.

Earlier this month, Sprint announced it was closing five of its PCS customer service centers throughout the nation, putting 3,000 people out of work. One of the centers is located in Lawrence and will affect about 500 jobs.

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