Nortel Lowers Revenue Guidance, Amends Credit Pact

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Nortel

(NT)

lowered its fourth-quarter revenue guidance but said its loss for the period would be slightly narrower than expected. The company also said the size of an existing credit agreement was reduced.

The network equipment maker now expects revenue of $3.4 billion in the quarter, about $140 million less than the consensus forecast of analysts surveyed by FirstCall.

The company said it expects a pro forma loss from continuing operations of 16 cents a share in the period and a loss from continuing operations of 63 cents a share. Analysts polled by First Call were expecting a loss of 18 cents a share, excluding goodwill amortization.

TheStreet.com

examined the possibility Nortel would preannounce earnings and renegotiate its credit agreement in a story Thursday.

Nortel and its lenders agreed to new terms on the company's 364-day credit agreement entered June 2001. Under the amendments, the committed facility was reduced to $1.575 billion from $2 billion and is subject to covenants that require Nortel to maintain a minimum consolidated tangible net worth and to achieve minimum consolidated earnings before interest, taxes, depreciation and amortization.

Nortel also granted its lenders "security over assets of the company" if its debt rating falls below investment grade. The term of the agreement was extended to December 2002 from June 2002.

The expected loss will include a $630 million restructuring charge and a $900 million charge related to acquisitions and write-downs.