Verizon pours cold water on Telecom sale rumours

By NZPA

Thursday 6th June 2002

Verizon Communications today poured cold water on speculation it is planning to exit its 20.8 percent Telecom stake.

"We don't comment on rumour and speculation on matters of that nature," Steve Marcus, Verizon's director of international communications, told NZPA.

Mr Marcus said the company announced plans earlier this year to reduce its stake below 20 percent in a gradual manner, so as not to rattle the market, and nothing had changed since then.

"We are still in the process of doing that," he said.

The Australian Financial Review on Tuesday reported that the chance of the $NZ2 billion stake being sold in the next three months had heightened after ratings agency Moody's threatened to cut Verizon's long-term debt single A-1 credit rating.

The agency cited Verizon's $US63 billion ($NZ131 billion) debt as a "significant source of concern".

The AFR said investment banks were "all over the selldown like a rash".

It said the most likely sale option was through a convertible note issue, payable in two instalments and with a semi-annual coupon.

New York-based Verizon, the largest local phone company in the United States, had its first-quarter profit wiped out by $US2.5 billion ($NZ5.2 billion) in costs for declining investments and acquisitions.

Formerly called Bell Atlantic Corp, Verizon teamed up with Ameritech Corp to buy Telecom from the Government in 1990. The two companies reduced their holdings to 25 percent in 1993.

In 1998 Bell Atlantic tried unsuccessfully to sell its Telecom stake through a convertible note issue. Ameritech, now part of SBC Communications Inc, sold its shares through an offer of instalment receipts.

Shares in Telecom were up 6 cents at $5.16 this morning.

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