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Anschutz Purchase Aided Qwest on Taxes

Billionaire bought an airplane from the phone carrier in a 'like-kind exchange,' allowing the firm to defer liabilities.

November 25, 2002|From Bloomberg News

DENVER — Qwest Communications International Inc.'s biggest investor, Philip Anschutz, bought an aircraft from the company for $7.6 million in 2001, helping the local phone carrier defer some taxes.

A subsidiary of a company controlled by Los Angeles billionaire Anschutz purchased the plane in May 2001 in a so-called like-kind exchange, in which a company sells one asset and purchases another near the same time. The transaction deferred taxes on the sale for Denver-based Qwest, the company said in a filing with the Securities and Exchange Commission.

Companies use such exchanges to reduce taxes when upgrading vehicles, aircraft, Federal Communications Commission licenses and real estate, Qwest said in the filing. Qwest made the filing to describe transactions that had been "inadvertently left out" or not required in earlier filings, Qwest spokesman Steven Hammack said.

The subsidiary's purchase of the plane "resulted in significant tax deferrals and savings," Qwest said. "The transaction was approved by the disinterested members of our board of directors."

Shares of Qwest closed Friday at $4.62 on the New York Stock Exchange. The stock is down 67% year to date.

Qwest acquired the aircraft from a third party, which the filing doesn't identify, in December 2001. Rules governing such asset exchanges are meant to encourage investment and generate economic growth, Qwest said in the filing.

In a separate series of transactions, a subsidiary of Anschutz Co. received notes worth $36.9 million in connection with a transaction that involved KPNQwest, a Netherlands-based joint venture 47.5% owned by Qwest, and Global TeleSystems Inc., according to the filing.

In March 2002, KPNQwest bought assets from Global TeleSystems for $210 million in convertible KPNQwest bonds and the assumption of some debt and other obligations.

The Anschutz Co. subsidiary had become a creditor to Global TeleSystems in 2001 and had provided interim financing to Global TeleSystems in 2001 and 2002, according to the filing.

Anschutz informed Qwest's board of his company's relationship with Global TeleSystems "contemporaneous to when he found out KPNQwest was going for" the Global TeleSystems acquisition, Jim Monaghan, a spokesman for Anschutz, said over the weekend.

The notes still are held by Anschutz Co. and currently have no value, the filing said. KPNQwest filed for bankruptcy protection in May.

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