SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 4, 2002
QWEST COMMUNICATIONS INTERNATIONAL INC.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
000-22609 84-1339282
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(Commission File Number) (IRS Employer Identification No.)
1801 California Street Denver, Colorado 80202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 303-992-1400
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Not applicable
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(Former name or former address, if changed since last report)
Item 5. Other Events.
On September 4, 2002 Qwest Communications International Inc. ("Qwest") announced
that it had reached unanimous agreement with the 29 lenders in its syndicated
credit facility to amend Qwest's $3.4 billion credit facility. In addition,
Qwest has completed a new $750 million term loan at its Qwest Dex, Inc. ("Dex")
subsidiary. Both agreements are effective immediately. A copy of the amended and
restated credit agreement ("ARCA") is attached as Exhibit 10.1 to this Current
Report on Form 8-K. A copy of the Dex term loan agreement (the "Dex Loan") is
attached as Exhibit 10.2 to this Current Report on Form 8-K. A copy of the
Security and Pledge Agreement (the "Security Agreement") related to the ARCA and
the Dex Loan is attached as Exhibit 10.3 to this Current Report on Form 8-K. A
copy of the press release announcing these transactions is attached as Exhibit
99.1 to this Current Report on Form 8-K. This description is qualified in its
entirety by reference to these agreements.
Under the ARCA, Qwest Services Corporation ("QSC") has become the borrower and
has assumed all of the currently outstanding debt under the previous credit
facility. Qwest Capital Funding, Inc. and Qwest Corporation, the borrowers under
the previous facility, are not obligated under the ARCA. The ARCA is a revolving
credit facility. In addition, the maturity of the credit facility has been
extended from May 2003 to May 2005, and the financial covenants have been
revised, including increasing Qwest's maximum debt to consolidated EBITDA ratio
from 4.0 at the end of 2002 to 6.0 throughout the term of the agreement and
adding a new debt to consolidated EBITDA test of 2.5 at the Qwest Corporation
level. QSC's obligations are guaranteed by Qwest, Dex and Qwest Dex Holdings,
Inc. ("Dex Holdings"). Under the Security Agreement, QSC's obligations are
secured principally by a first priority pledge of the stock of Qwest's
subsidiary, Qwest Corporation, a second priority pledge of the stock of Dex and
Dex Holdings and a second priority pledge of certain assets of Dex. The maximum
amount of the revolving credit facility will remain at $3.4 billion, the current
amount outstanding. Qwest must reduce the credit facility with the net proceeds
of asset sales and capital markets events, subject to certain exceptions, and,
in any event, it must be reduced to $2.0 billion by December 31, 2003, $1.5
billion by June 1, 2004 and $1.25 billion by December 1, 2004. Qwest paid
certain one-time fees and will pay an interest rate of LIBOR plus 3.50% per
annum on the outstanding amounts under the ARCA.
Under the terms of the Dex Loan, Dex, the borrower, has obtained a $750 million
term loan due in September 2004. The Dex Loan is guaranteed by Dex Holdings and
QSC and, under the Security Agreement, the obligations are secured by a first
priority pledge of the stock of Dex and Dex Holdings, a first priority pledge of
certain assets of Dex and a second priority pledge of the stock of Qwest
Corporation. The Dex Loan provides for financial covenants for Dex that include
a ratio of consolidated EBITDA of Dex Holdings and its subsidiaries to senior
debt (which includes the Dex Loan and any other senior debt (other than Dex's
guarantee of the ARCA)) of 1.25 (increased to 1.75 after the sale of the first
phase of Dex), a consolidated EBITDA of Dex Holdings and its subsidiaries to
interest coverage ratio (excluding intercompany interest) of 8.75 (reduced to
4.75 after the sale of the first phase of Dex) and a minimum net worth test
requiring that the consolidated net worth of Dex Holdings and its subsidiaries
may not fall more than $150 million below its net worth as of June 30, 2002. The
parties have agreed to adjust the minimum net worth test after the previously
announced sale of the first phase of the Dex business, with the understanding
that the permitted decrease in net value after such readjustment will remain at
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least at the same proportion to net worth as the initial test. The Dex Loan is
not required to be repaid on the sale of the first phase of Dex, but must be
paid in full upon the sale of the second phase of Dex, expected in 2003. Qwest
has previously announced an agreement to sell the entire Dex business in two
stages. The closing of the first stage is subject to several conditions,
including, among others, the termination or expiration of the applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, the consummation of the debt financing pursuant to which the buyer
intends to fund the purchase, no material adverse effect occurring with respect
to the first portion of the Dex business or of Qwest and its subsidiaries, and
the receipt of certain consents. The Dex Loan consists of a fixed interest rate
component, at a rate of 14% per annum, and a floating interest rate component,
at a rate of LIBOR plus 11.50%. Dex also paid certain one-time fees in
connection with the Dex Loan.
Both facilities cross-default to each other and contain covenants limiting
additional debt, additional liens, certain investments, dividends, and other
transactions, subject in each case to certain negotiated exceptions. Both
facilities permit the sale of Dex as currently contemplated.
Forward Looking Statements Warning
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This Current Report on Form 8-K contains projections and other forward-looking
statements that involve risks and uncertainties. These statements may differ
materially from actual future events or results. Readers are referred to the
documents filed by us with the Securities and Exchange Commission, 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 effect to our business or
financial position; our substantial indebtedness, and our inability to complete
any efforts to de-lever our balance sheet through asset sales or other
transactions; any adverse outcome of the SEC's current investigation into our
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 our 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
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 in our
significant accounting policies.
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The information contained in this Current Report on Form 8-K 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 Current Report on Form
8-K 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 Current Report on Form 8-K 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.
By including any information in this Current Report on Form 8-K, Qwest does not
necessarily acknowledge that disclosure of such information is required by
applicable law or that the information is material.
Item 7. Financial Statements and Exhibits.
Exhibit 10.1 Second Amended and Restated Credit Agreement dated as of May 4,
2001, as amended and restated as of March 21, 2002 and further
amended and restated as of August 30, 2002, by and among Qwest
Services Corporation, Qwest Communications International Inc.,
Qwest Dex, Inc., Qwest Dex, Inc., the Banks listed therein, and
Bank of America, N.A., as Agent.
Exhibit 10.2 Term Loan Agreement dated as of August 30, 2002, by and among
Qwest Services Corporation, Qwest Dex Holdings, Inc., Qwest Dex,
Inc., the Lenders listed therein, and Bank of America, N.A., as
Agent.
Exhibit 10.3 Security and Pledge Agreement dated as of August 30, 2002, by and
among Qwest Services Corporation, Qwest Dex Holdings, Inc., Qwest
Dex, Inc., and Bank of America, N.A., as Collateral Agent.
Exhibit 99.1 Press Release dated September 4, 2002.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Qwest has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
QWEST COMMUNICATIONS INTERNATIONAL INC.
DATE: September 4, 2002 By: /s/ YASH A. RANA
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Name: Yash A. Rana
Title: Vice President
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EXHIBIT INDEX
Exhibit No. Description
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Exhibit 10.1 Second Amended and Restated Credit Agreement dated as of May 4,
2001, as amended and restated as of March 21, 2002 and further
amended and restated as of August 30, 2002, by and among Qwest
Services Corporation, Qwest Communications International Inc.,
Qwest Dex, Inc., Qwest Dex, Inc., the Banks listed therein, and
Bank of America, N.A., as Agent.
Exhibit 10.2 Term Loan Agreement dated as of August 30, 2002, by and among
Qwest Services Corporation, Qwest Dex Holdings, Inc., Qwest Dex,
Inc., the Lenders listed therein, and Bank of America, N.A., as
Agent.
Exhibit 10.3 Security and Pledge Agreement dated as of August 30, 2002, by and
among Qwest Services Corporation, Qwest Dex Holdings, Inc., Qwest
Dex, Inc., and Bank of America, N.A., as Collateral Agent.
Exhibit 99.1 Press Release dated September 4, 2002.
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