NEW YORK-Following an unsuccessful court challenge by some bondholders, Denver-based Qwest Communications International Inc. reduced its outstanding debt by $1.9 billion to $22.6 billion through an exchange offer.
Qwest offered the chance for Qwest Capital Funding bondholders to swap those securities for notes issued by the parent company and by its Qwest Services Corp. subsidiary.
“The successful results of this private exchange offer mark another significant step in our plans to improve liquidity and strengthen our balance sheet, said Oren Shaffer, chief financial officer of Qwest Communications.
Some bondholders requested a court injunction to block the exchange, but they dropped their challenge after a judge refused to impose a preliminary injunction. The bondholders alleged that Qwest’s offer was coercive and violated securities laws. They said that the new debt securities would have a lower face value than those they had purchased originally. However, if they opted to hang onto those bonds instead of exchanging them, the original bonds would be placed on a subordinated rung of the debt repayment hierarchy.
