KANSAS CITY, MISSOURI - Sprint Corp. on Friday announced it had obtained a $1 billion loan commitment and hired investment firms for advice on what its directory publishing business may be worth in a sale. <br>
<br>
The moves were intended to improve the telecommunications company's financial flexibility, said Sprint Arthur B. Krause, Sprint's executive vice president and chief financial officer. <br>
<br>
``Our objective is to optimally manage our capital structure and maintain strong liquidity,'' Krause said. ``Our hope is that the market will again focus on the fundamentals of our businesses.'' <br>
<br>
Sprint, the nation's third largest long-distance carrier, said it had signed a letter of intent with Citibank NA and Deutsche Bank AG for a $1 billion nine-month loan. The loan was secured by the assets of Sprint's directory publishing business and equals the net new cash requirements for the company for the entire year. <br>
<br>
Sprint also hired Deutsche Banc Alex. Brown Inc. and Salomon Smith Barney Inc. to ``explore values that Sprint could obtain if it were to sell the directory publishing business.'' <br>
<br>
Kevin Calabrese, telecommunications analyst at Argus Research in New York, said the moves by Sprint boost its liquidity, but may have been unnecessary. <br>
<br>
``It means that the bankers and the markets have recognized that Sprint is not a company that should have any questions about its viability,'' Calabrese said. <br>
<br>
Calabrese said, however, the financing could end up costing Sprint. <br>
<br>
``They had to make these moves to ensure near term financing so they wouldn't hit a liquidity crunch. Sprint has so many different financing options that the liquidity crunch is ephemeral. But that possibility exists for other telecommunications companies,'' he said. <br>
<br>
Sprint has been swept along in a decline in stock prices in the telecom industry. Since June 2000, when Sprint Corp.'s proposed merger with WorldCom Inc. failed, Sprint's market value has dropped from $129 billion to less than $23 billion. The company has laid off 6,000 employees and 1,500 contractors in recent months. <br>
<br>
Earlier this month, Sprint announced it was closing five of its PCS customer service centers throughout the nation, putting 3,000 people out of work. <br>
<br>
Sprint's FON stock, which tracks most operations including local and long-distance wireline service, increased 56 cents to $14.65 in midday trading on the New York Stock Exchange while its PCS shares, which tracks Sprint's wireless operations, slipped 19 cents to $9.06 a share.
