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Qwest's Rating Downgraded To Junk Status
Standard & Poor Cites Numerous Factors For Move
POSTED: 9:46 a.m. MDT May 23, 2002
UPDATED: 1:22 p.m. MDT May 23, 2002
DENVER -- Troubles continue for Qwest Communications.
It's stock was headed down Thursday, less than a day after Qwest's credit rating took a major hit. And none of it is good news for shareholders or Qwest employees, 7NEWS reported.
Standard & Poor downgraded Qwest's bond rating to junk status on Wednesday, saying that concerns about the economy, competition and management credibility prompted the move.
S&P cited a number of other factors including shareholder lawsuits and a federal
investigation into accounting practices that it said could hurt the
company's ability to "re-establish management credibility."
This downgrade means Qwest will likely have to pay a higher interest rate to borrow money and some investment firms will be forced to sell existing Qwest bonds because of the downgrade.
Right now Qwest has $26 billion in outstanding debt. The company is trying to sell off its QwestDex yellow pages division and hopes to pull in as much as $10 billion from the sale next month.
The company says it has enough cash on hand to keep paying off on its debts for another year. But two months ago it had to renegotiate bank deals to avoid default.
The company also says it disagrees with Wednesday's downgrade by Standard & Poor and says the downgrade was not based on any new information.
Qwest holds its annual shareholders' meeting June 4. But instead of meeting in Colorado, where the company is based and where it is the largest private employer, it is holding the meeting in Dublin, Ohio.
That fact has made shareholders furious and complaining that Qwest's management is running away from individual shareholders who want answers as to why the stock is performing so poorly.
Standard & Poor downgraded Qwest's bond rating to junk status on Wednesday, saying that concerns about the economy, competition and management credibility prompted the move.
S&P cited a number of other factors including shareholder lawsuits and a federal
investigation into accounting practices that it said could hurt the
company's ability to "re-establish management credibility."
This downgrade means Qwest will likely have to pay a higher interest rate to borrow money and some investment firms will be forced to sell existing Qwest bonds because of the downgrade.
Right now Qwest has $26 billion in outstanding debt. The company is trying to sell off its QwestDex yellow pages division and hopes to pull in as much as $10 billion from the sale next month.
The company says it has enough cash on hand to keep paying off on its debts for another year. But two months ago it had to renegotiate bank deals to avoid default.
The company also says it disagrees with Wednesday's downgrade by Standard & Poor and says the downgrade was not based on any new information.
Qwest holds its annual shareholders' meeting June 4. But instead of meeting in Colorado, where the company is based and where it is the largest private employer, it is holding the meeting in Dublin, Ohio.
That fact has made shareholders furious and complaining that Qwest's management is running away from individual shareholders who want answers as to why the stock is performing so poorly.
Previous Stories:
- May 20, 2002: Qwest Directory Sale May Increase Your Phone Bill
- May 13, 2002: Employees Concerned But Support Qwest
- February 11, 2002: Qwest: Privacy Is Not Your Absolute Right
- February 5, 2002: Qwest To Microsoft Migration Causing Headaches
- January 28, 2002: Qwest Calls Off Plan To Share Customer Info
- January 24, 2002: Qwest Explains Its New Private Policy Notice
- January 24, 2002: Woman's Qwest DSL Problem Linked To Modem
- January 22, 2002: How To Keep Qwest From Selling Your Info To Telemarketers
- January 2, 2002: Qwest Could Release Customers' Information
- December 13, 2001: Qwest Slashes 7,000 More Jobs
- October 26, 2001: Qwest Drops Plans To Charge For Unlisted Number
- October 17, 2001: Qwest's Plans To Charge For Non-Listing Blocked
- October 3, 2001: Qwest Wants To Charge To Withhold Addresses
- September 6, 2001: Qwest Refuses Code Red Refunds
- August 9, 2001: Qwest Billing Errors Greater Than First Thought
- August 9, 2001: Qwest Message Cites Media For Call Delays
- August 8, 2001: Qwest, Microsoft Partnership Upsets Some
- August 7, 2001: Qwest CEO Webcast Goes Pfzzt!
- August 6, 2001: Some Unhappy With Qwest DSL Service
- July 26, 2001: More Qwest Billing Errors Pop Up
- July 25, 2001: Qwest Posts Largest Quarterly Loss In Colorado History
- July 19, 2001: Call 7: Qwest Complaints
- May 22, 2001: Qwest Expanding DSL Service
- May 14, 2001: Qwest Raising Pay Phone Rates Again
- May 11, 2001: Qwest Getting Back Into Long Distance
- May 2, 2001: Qwest Ordered To Refund $11.2 Million
- March 7, 2001: US West Retirees Fighting Qwest Use Of Pension Surplus
- March 1, 2001: Qwest Raising Rates On 411 Information Calls
Copyright 2002 by TheDenverChannel.com. The Associated Press contributed to this report. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.








