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Alcatel-Lucent Note Offering Pushes Out Maturity Schedule

Jon C. Ogg

Alcatel-Lucent SA (ALU) is in the midst of a turnaround, or perhaps correcting a misguided turnaround that has hobbled the communications equipment maker for a decade. The stock was incredibly well received after its fresh earnings report and the stock even managed to hit a 52-week high. Now come word that Alcatel-Lucent has even better news under its "Shift Plan" under new CEO Michel Combes. The company is conducting a bond issue that effectively puts off many of the concerns that investors have had over its coming debt maturities.

The company's Alcatel-Lucent USA Inc. subsidiary plans to offer $500 million in senior notes that will mature January 1, 2020. These will not be exchange traded and will be sold only to qualified institutional U.S. buyers under Rule 144A and also to non-US investors under Regulation S offerings.

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Alcatel-Lucent said, "This offering, which aims to extend the average maturity of our debt, is part of the Shift Plan announced by the company in June 2013. The net proceeds from the issuance of the Notes will be used for partial repayment of amounts outstanding under Alcatel-Lucent USA Inc.'s Senior Secured Credit Facilities announced on January 30, 2013."

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We do not yet have data on the coupon rate that Alcatel-Lucent will pay. What we do have is that this pushes short-term debt obligations out into long-term obligations that will not come due for almost seven years.

Alcatel-Lucent is getting more accolades under new leadership for its plan to become solely an advanced communications equipment provider rather than a one-stop communications equipment shop such as Cisco. The only problem is that this company has such a history of disappointment that there are still many who doubt its future. If Wall Street is any vote that matters, we would note that shares just hit yet another 52-week high of $2.55 on Wednesday.

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