DENVER—Qwest Communications International Inc., which was unable to roll over part of its short-term debt on Thursday, has drawn down its $4 billion bank credit facility to address short-term liquidity needs in the commercial paper market.
The telecom company said it was using the proceeds to pay down all of its $3.2 billion of commercial paper and will use the remaining $800 million to give it flexibility in the capital markets. Qwest said its current net debt outstanding remains approximately $24.9 billion, and that it is exploring additional longer term refinancing options that would not increase it total net debt outstanding.
“These steps address the short-term commercial paper market liquidity needs while allowing us to focus on executing on our strategy to grow our business, strengthen our balance sheet and generate free cash flow,” said Joseph Nacchio, chairman and chief executive officer of Qwest.
Qwest’s move triggered downgrades by ratings agencies with Moody’s Investor Services cutting Qwest’s long-term debt rating from Baa1 to Baa2, and Fitch Ratings downgrading Qwest’s senior secured rating from BBB+ to BBB, just two notches above junk bond status.
“This lack of alternate liquidity considerably limits the company’s financial flexibility and poses a risk to damage Qwest’s overall competitive profile if not resolved expeditiously,” Moody’s said.
Qwest’s stock price took a similar hit, falling more than 10 percent in Friday trading to a new 52-week low of $6.60 per share. The company’s stock was trading around the $15 per share range earlier this year and was as high as $41.86 last year.
