Qwest Carves $1.9B from Debt Load

Financially troubled Baby Bell Qwest Communications International Inc.
unloaded some $1.9 billion in debt this week by convincing bondholders to trade
in one set of notes for another.

The Denver-based telco exchanged $12.9 billion in outstanding debt securities
of its Qwest Capital Funding Inc. subsidiary in a private placement for new debt
securities. The deal offered Qwest Capital Funding bondholders up to almost $4
billion in new Qwest Services Corp. notes and $6.6 billion in new Qwest

As of the Dec. 20 expiration date for the offer, $5.2 billion of the original
debt had been accepted for exchange, with the difference between the two bond
packages carving $1.9 billion out of the company's $24.5 billion debt load. The
move also extends some near-term maturities.

The debt exchange is the latest in a string of moves Qwest has made to
whittle down its debt load, including the sale of its QwestDex
directory-publishing business.

"The successful results of this private exchange offer mark another
significant step in our plans to improve liquidity and deleverage and strengthen
our balance sheet, which we have undertaken to benefit all of the company's
constituencies," vice chairman and chief financial officer Oren Shaffer said in
a release. "We continue to make progress on improving Qwest's financial position
to ensure the long-term success of the company."

Qwest still faces federal investigations into its accounting practices
regarding system-capacity swaps it made with other carriers in 2000 and 2001. It
plans to restate some $1.56 billion in earnings for those two financial