BARCELONA Telecom equipment maker Alcatel-Lucent ALUA.PA is looking at options including asset-backed financing to strengthen its balance sheet, it said on Thursday.
Chief Financial Officer Paul Tufano told a Morgan Stanley conference the company was looking at measures with regard in particular to convertible debt due in 2015.
"(There are) three options, four options," he said at the investment bank's Technology, Media and Telecoms conference.
"We are doing the research (so) that it will provide the ability to take the liquidity issue off the table. Specifics are actively being worked right now."
"I can tell you we are extremely focused on it," he added.
Speaking on the sidelines of the conference, Tufano said the company was looking at monetizing its "very robust" patent portfolio, either through licensing or selected sales.
It was seeing interest in the patents from a lot of different sources, he said.
Asked whether he was considering asset-backed financing, he replied that it was a "possibility".
"We are evaluating a number of choices," he said.
Options being discussed with banks include pledging the submarine cable business, patents, or other assets to back the debt, three sources familiar with the matter told Reuters.
"They are looking to back it with a 'collateral package' which could include patents and submarine assets," said one source.
"But we don't know if that will work because they have negative covenants on their debt and there are so many different contracts involved."
Banks including JP Morgan, Citigroup, Societe Generale, Deutsche Bank, BNP Paribas, and others are being consulted by Alcatel, the sources said.
"There are a lot of banks around this, pitching ideas for the right structure to get the right amount of liquidity," said a second person.
"The company has to be more creative. It's no longer a situation where it can just print a bond deal at 9.25 percent."
Alcatel also said earlier this month the company could sell assets to strengthen its balance sheet after posting a second straight quarterly loss.
The company faces about 2.2 billion euros in debt repayments through to the end of 2015, with a major deadline on January 1, 2015, according to analysts.
Tufano said on Thursday that weak macroeconomic conditions were hampering demand, especially in western Europe, and China was more muted than it had been.
But he said the group had good traction with LTE (next generation mobile technology), particularly in the United States, where its customer AT&T (T.N) is increasing capital investment. He said he hoped to get "a fair share" of AT&T's spending.
(Additional reporting by Tarmo Virki in Helsinki, Leila Abboud in Paris, Natalie Harrison and Isabell Witt in London; Editing by Mark Potter)