Shares of Alcatel-Lucent SA (ADR) (NYSE: ALU), a Paris, France-based company engaged in the field of networking and communications technology, products and services, continued to rally in trading today after the company last Friday confirmed that it entered into multi-year financing commitments.
ALU last Friday said that it entered into commitments with Credit Suisse AG and Goldman Sachs Bank USA for euro 1.615 billion in senior secured credit facilities. Alcatel-Lucent USA, a subsidiary of ALU, is expected to be the borrower and ALU and some of its material subsidiaries will act as guarantors. The credit facilities are expected to be denominated in dollars and in euros and will have maturities of three and half to six years. The facilities are expected to be secured by intellectual property portfolio of ALU among other things.
Commenting on the development, Ben Verwaayen, CEO of Alcatel-Lucent, last Friday said that a multi-year financing commitment allows ALU to operate and adapt its business in a manner which is appropriate in today’s markets. Verwaayen said that proceeds from the new financing will be used to effectively extend the company’s maturity profile over the next several years and provide additional flexibility to finalize its previously announced Performance Program priorities, which includes the euro 1.25 billion cost reduction target and the exiting or restructuring of unprofitable Managed Services contracts and geographic markets.
After rallying more than 12% on Friday, ALU shares rose another 6.45% to $1.32 in trading today on above average volume of 42.86 million. The stock hit an intra-day high of $1.39.
Despite the recent gains, ALU shares are down 15.38%, year-to-date, compared to a gain of 13.74% for the S&P 500.
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