Lucent Technologies and TeleCorp PCS are planning to re-offer $425 million in vendor financing paper and are considering putting together a second roadshow to market the deal, according to BW sister publication Telecom Financing Week. In March, TeleCorp, the largest AT&T affiliate, planned to raise some $425 million via a private sale of the vendor paper in the form of zero-coupon, 10-year notes to Lucent, which then planned to sell the paper to institutional investors, afterwards. But adverse market conditions drove yields up and the deal was shelved. A Lucent spokesperson declined to specify the yield Lucent and TeleCorp were seeking.
The deal, led by Credit Suisse First Boston and Deutsche Bank, has since been revised to include various covenants because of the difficulties in selling the notes. But even with yields over 17%, there was not enough investor interest to get the deal done, according to one buysider. Buysiders say the companies were seeking a yield of about 16%. "Everybody knows Lucent wanted to clear its balance sheet. Buysiders saw a chance to milk the whole situation. We weren't willing to give in to anything under a 17% yield," says one portfolio manager.