ride the light [GRAPHIC OMITTED] NEWS
Qwest
QWEST COMMUNICATIONS SELLS QWESTDEX FOR $7.05 BILLION
Private Equity Firms - The Carlyle Group and Welsh, Carson, Anderson & Stowe
- To Create New Entity to Support Directory Customers
Deal Part of Company Deleveraging Strategy,
Strengthens Qwest Balance Sheet
DENVER, August 20, 2002 -- Qwest Communications International Inc. (NYSE: Q)
today announced it has agreed to sell for $7.05 billion its QwestDex publishing
business to a new entity formed by the private equity firms of The Carlyle Group
and Welsh, Carson, Anderson & Stowe. The transaction involves the sale of the
entire QwestDex publishing business in two stages, the first of which is
expected to close in the fourth quarter 2002, with the second stage expected to
close in 2003.
"As we promised, we are moving aggressively to take the necessary steps to
ensure the long-term success of the company and our ability to continue to
provide world-class services to our customers," said Richard C. Notebaert,
Qwest's chairman and CEO. "The sale of QwestDex is a significant part of our
plan to delever and strengthen our balance sheet and will allow us to focus on
maximizing the profitability of our core operations."
The transaction will be completed in two stages. The first stage, involving the
sale of QwestDex operations in Colorado, Iowa, Minnesota, Nebraska, New Mexico,
North Dakota and South Dakota, is for $2.75 billion and is expected to close in
the fourth quarter of 2002. The second phase, which includes Arizona, Idaho,
Montana, Oregon, Utah, Washington and Wyoming, is for $4.30 billion and is
expected to close in 2003.
Qwest expects to use the proceeds from the sale to partly pay down debt and for
other company funding requirements.
The new company will be the exclusive directory publisher for Qwest in the
states where the company provides local service, and will satisfy all of Qwest's
publishing obligations and continue to provide world-class directory services to
consumers and businesses.
Both stages are subject to customary closing conditions, including the
satisfaction of conditions for the buyer's debt financing. In addition, the
second stage is contingent upon the receipt of certain state regulatory
approvals and the buyer's ability to secure additional equity financing, which
may be provided by Qwest.
Qwest has already taken several additional steps to deliver on both its
short-term and long-term objectives, including:
o Achieving positive free cash flow for the second quarter 2002;
o Announcing that Banc of America Securities LLC has agreed to act as
sole arranger and sole book runner for a proposed $500 - $750 million
Senior Secured Credit Facility at QwestDex, Inc. The company has
obtained a commitment from an affiliate of Bank of America for $200
million of this proposed new facility. The commitment is subject to
completion of the restructuring of the existing syndicated credit
facility and other customary closing conditions for a facility of this
type, including the parties entering into definitive agreements;
o Complying with the financial covenants in the credit facility, and with
the financial covenants in its indentures, each as of June 30, 2002;
o Entering into discussions with Bank of America, the administrative
agent for its syndicated credit facility, about restructuring the
facility; and,
o Revising its financial guidance for full year 2002.
Lehman Brothers acted as financial advisor, and delivered a fairness opinion, to
Qwest. In addition, Merrill Lynch delivered a fairness opinion to Qwest.
About Qwest
Qwest Communications International Inc. (NYSE: Q) is a leading provider of
voice, video and data services to more than 25 million customers. The company's
55,000 employees are committed to the "spirit of service" and providing
world-class services that exceed customers' expectations for quality, value and
reliability. For more information, please visit the Qwest Web site at
www.qwest.com.
# # #
This release may contain projections and other forward-looking statements that
involve assumptions, risks and uncertainties. Readers are cautioned not to place
undue reliance on these statements, which speak only as of the date of this
release. These statements may differ materially from actual future events or
results. Readers are referred to the documents filed by Qwest Communications
International Inc. (together with its affiliates, "Qwest", "we" or "us") with
the Securities and Exchange Commission (the "SEC"), specifically the most recent
reports which identify important risk factors that could cause actual results to
differ from those contained in the forward-looking statements, including but not
limited to: the duration and extent of the current economic downturn in our
14-state local service area, including its effect on our customers and
suppliers; the effects of our anticipated restatement of historical financial
statements including delays in or restrictions on our ability to access the
capital markets or other adverse effects to our business and financial position;
our substantial indebtedness, and out inability to restructure our $3.4 billion
credit facility prior to failing to comply with financial covenants contained
therein or any inability to complete efforts de-lever our balance sheets through
asset sales of other transactions; any adverse outcome of the SEC's current
inquiries into Qwest's accounting policies, practices and procedures; any
adverse outcome of the current investigation by the U.S. Attorney's office in
Denver into certain matters relating to us; adverse results of increased review
and scrutiny by Congress, regulatory authorities, media and others (including
any internal analyses) of financial reporting issues and practices or otherwise;
the failure of our chief executive and chief financial officers to provide
certain certifications relating to certain public filings; rapid and significant
changes in technology and markets; failure to achieve the projected synergies
and financial results expected to result from the acquisition of U S WEST, and
difficulties in combining the operations of the combined company; our future
ability to provide interLATA services within our 14-state local service area;
potential fluctuations in quarterly results; volatility of Qwest's stock price;
intense competition in the markets in which we compete; changes in demand for
our products and services; dependence on new product development and
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acceleration of the deployment of advanced new services, such as broadband data,
wireless and video services, which could require substantial expenditure of
financial and other resources in excess of contemplated levels; higher than
anticipated employee levels, capital expenditures and operating expenses;
adverse changes in the regulatory or legislative environment affecting our
business; adverse developments in commercial disputes or legal proceedings; and
changes in the outcome of future events from the assumed outcome included by
Qwest in its significant accounting policies. The information contained in this
release is a statement of Qwest's present intention, belief or expectation and
is based upon, among other things, the existing regulatory environment, industry
conditions, market conditions and prices, the economy in general and Qwest's
assumptions. Qwest may change its intention, belief or expectation, at any time
and without notice, based upon any changes in such factors, in Qwest's
assumptions or otherwise. The cautionary statements contained or referred to in
this release should be considered in connection with any subsequent written or
oral forward looking statements that Qwest or persons acting on its behalf may
issue. This release may include analysts' estimates and other information
prepared by third parties for which Qwest assumes no responsibility. Qwest
undertakes no obligation to review or confirm analysts' expectations or
estimates or to release publicly any revisions to any forward-looking statements
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
The Qwest logo is a registered trademark of, and CyberCenter is a service mark
of, Qwest Communications International Inc. in the U.S. and certain other
countries.
Contacts: Media Contact: Investor Contact:
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Tyler Gronbach Stephanie Comfort
303-992-2155 800-567-7296
tyler.gronbach@qwest.com IR@qwest.com
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