[CANSLIM] OT - Qwest bond swap

From: "Tom Worley" <stkguru@bellsouth.net>
Subject: [CANSLIM] OT - Qwest bond swap
Date: Wed, 25 Dec 2002 08:10:38 -0500
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Here are some more details. As I suspected, the cost of servicing the =
new debt will considerably exceed what the old bonds were paying because =
of the drastically higher "junk bond" rates. So total debt goes down, =
but expenses goes up. Also noteworthy that only institutional holders =
were involved, this bond swap could not be "offered" to the public =
because Qwest's financials have not been audited, and in light of the =
ongoing investigations. The FCC, while approving the entry into long =
distance service, also expressed concerns over allegations that Qwest =
bribed competitors into supporting their application by giving them =
secret deals for access to their network, and intends to monitor Qwest =
closely in the future. Several states are also investigating them and =
these deals.

Again from Yahoo: (formatting and marking is mine)
"
Holders of about $4 billion of Qwest bonds went to court to challenge =
the exchange offer, which Qwest announced on Nov. 20.=20

They said Qwest was forcing them to exchange their bonds at a fraction =
of face value -- between 52.5 percent and 82.5 percent, depending on the =
bond -- or else fall lower in the pecking order for repayment in case =
Qwest went broke.=20

Last week, Judge Denny Chin for the U.S. District Court in Manhattan =
denied a motion to block the exchange, saying the bondholders failed to =
prove "irreparable harm." The bondholders later dropped their complaint. =


Qwest said holders of $5.2 billion of Qwest Capital Funding Inc. debt =
maturing between 2004 and 2031 exchanged it for $3.3 billion of more =
senior debt issued by Qwest Services Corp. maturing in 2007, 2010 or =
2014.=20

Qwest had offered to exchange up to $12.9 billion of the old bonds,(so =
not what I would call a successful offering, well under half accepted) =
which carried interest rates between 5.875 percent and 7.9 percent. The =
new debt carries rates between 13 percent and 14 percent."



Tom Worley
stkguru@bellsouth.net
AIM: TexWorley
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<DIV><FONT face=3DArial>Here are some more details. As I suspected, the =
cost of=20
servicing the new debt will considerably exceed what the old bonds were =
paying=20
because of the drastically higher "junk bond" rates. So total debt goes =
down,=20
but expenses goes up. Also noteworthy that only institutional holders =
were=20
involved, this bond swap could not be "offered" to the public because =
Qwest's=20
financials have not been audited, and in light of the ongoing =
investigations.=20
The FCC, while approving the entry into long distance service, also =
expressed=20
concerns over allegations that Qwest bribed competitors into supporting =
their=20
application by giving them secret deals for access to their network, and =
intends=20
to monitor Qwest closely in the future. Several states are also =
investigating=20
them and these deals.</FONT></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial>Again from Yahoo: (formatting and marking is=20
mine)</FONT></DIV>
<DIV><FONT face=3DArial>"</FONT>
<P><FONT face=3DArial>Holders of about $4 billion of Qwest bonds went to =
court to=20
challenge the exchange offer, which Qwest announced on Nov. 20. </FONT>
<P><FONT face=3DArial>They said Qwest was forcing them to exchange their =
bonds at=20
a <EM>fraction of face value -- between 52.5 percent and 82.5 =
percent</EM>,=20
depending on the bond -- or else fall lower in the pecking order for =
repayment=20
in case Qwest went broke. </FONT>
<P><FONT face=3DArial>Last week, Judge Denny Chin for the U.S. District =
Court in=20
Manhattan denied a motion to block the exchange, saying the bondholders =
failed=20
to prove "irreparable harm." The bondholders later dropped their =
complaint.=20
</FONT>
<P><FONT face=3DArial>Qwest said holders of <STRONG>$5.2 =
billion</STRONG> of Qwest=20
Capital Funding Inc. debt maturing between 2004 and 2031 exchanged it =
for=20
<STRONG>$3.3 billion</STRONG> of more senior debt issued by Qwest =
Services Corp.=20
maturing in 2007, 2010 or 2014. </FONT>
<P><FONT face=3DArial><STRONG>Qwest had offered to exchange up to $12.9 =
billion of=20
the old bonds</STRONG>,(<FONT color=3D#ff0000>so not what I would call a =

successful offering, well under half accepted)</FONT>&nbsp;which carried =

interest rates between <STRONG>5.875 percent and 7.9 percent</STRONG>. =
The new=20
debt carries rates between <STRONG>13 percent and 14=20
percent</STRONG>."</FONT></P>
<P><FONT face=3DArial></FONT>&nbsp;</P></DIV>
<DIV><FONT face=3DArial>Tom Worley<BR></FONT><A=20
href=3D"mailto:stkguru@bellsouth.net"><FONT=20
face=3DArial>stkguru@bellsouth.net</FONT></A><BR><FONT face=3DArial>AIM: =

TexWorley</FONT></DIV></BODY></HTML>

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