TRENTON, N.J. — A deal for struggling Lucent Technologies Inc. to sell two Midwest manufacturing plants for sorely needed cash reportedly has collapsed.
The telecommunications equipment maker refused Thursday to confirm a report in The Wall Street Journal that plans to sell plants in Oklahoma City and Columbus, Ohio, to an Asian contract manufacturer had fallen through.
“We’re not commenting on speculation,” said Bill Price, a spokesman for Murray Hill-based Lucent.
Lucent, once a high-flying technology giant and Wall Street favorite, disclosed plans to sell the two facilities when it announced a sweeping cost-cutting and restructuring program back in January.
On Thursday, Price said Lucent is negotiating with multiple bidders interested in the plants.
“We expect to make our selections early this summer and have the transitions completed by the end of the fiscal year,” which is Sept. 30, he said.
The Journal reported that sources familiar with the deal said Lucent expected to raise $600 million to $900 million by selling the two plants to Flextronics International Ltd., which is registered in Singapore but has corporate offices in Hong Kong. Flextronics officials could not be reached Thursday for comment and earlier declined to comment to the Journal.
Price would not confirm a collapse of the Flextronics deal, or even that the company was one of the bidders.
Shares of Lucent were down 49 cents to close at $6.75 Thursday on the New York Stock Exchange.
If Lucent cannot sell the plants by summer’s end, plans to spin off its microelectronics unit, Allentown, Pa.-based Agere Systems, could be jeopardized.
Under terms of its $4 billion revolving credit line, by Sept. 30 Lucent must raise $2 billion from sources other than product sales. Options include selling assets, such as the profitable optical fiber business Lucent wants to sell for several billion dollars, or by selling new stock or bonds.
“We have multiple ways to do that and we’re confident we’ll be able to do that,” Price said.
Falling demand for telecommunications equipment reportedly have cut bids for the optical fiber unit from $6 billion to $8 billion down to about $4 billion.
But with Lucent’s corporate credit rating downgraded to “junk” status on Tuesday, a reported plan to offer up to $1 billion of convertible preferred stock – bonds that can be converted to stock – will be more expensive to execute. Price declined comment on the plan, reported by the Journal.
Lucent, home of the Bell Labs research operation and a 1996 spinoff of AT&T, grew rapidly early on, then shocked Wall Street with repeated warnings it would miss earnings targets, starting in fall 1999. Its stock went into a tailspin as competitors captured market share with faster optical telecommunications equipment. The continuing problems cost chief executive Richard McGinn his job.
On the Net: