Qwest Sets Refinancing

The company will slash debt by $2 billion.
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Qwest (Q) says it is reducing its debt by $2 billion.

The Denver telco plans to tap the convertible bond market for $1 billion and use $2 billion in existing cash to retire about $3 billion in debt. The refinancing move will relieve Qwest of expensive obligations. The notes pay between 13% and 14%, and one issue comes due in 2007. Qwest had $17.3 billion in debt at Dec. 31.

Earlier Tuesday, the Rocky Mountain Bell agreed to pay $400 million to settle investor lawsuits tied to the aggressive bubble-era accounting practices of previous management led by ex-CEO Joe Nacchio.

Qwest has 14 months to pay the sum in three installments. Qwest would pay $100 million within 30 days of preliminary court approval of the deal, another $100 million within 30 days of final court approval and then the balance by Jan. 15, 2007.

The company also posted a third-quarter loss Tuesday. The Denver telco lost $144 million, or 8 cents a share, as compared to the year-ago loss of $164 million, or 9 cents a share. Revenue rose 1% from a year ago to $3.5 billion.

Qwest shares closed down 13 cents, or 3%, at $4.23 Tuesday.