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Anschutz to sell most of Qwest stake

January 18, 2007|From Bloomberg News

Qwest Communications International Inc. founder Philip Anschutz agreed to sell 43 million shares last week, part of a plan to liquidate more than 90% of his stake in the fourth-largest telephone company.

Through a series of forward-sale contracts disclosed between June and last week, Anschutz stands to reap about $1.39 billion in upfront cash while maintaining control of most of his shares until 2010. Anschutz is Qwest's second-largest shareholder, with a 13% stake, behind Fidelity Investments.

The sale diminishes Anschutz's role at Denver-based Qwest, which he started in 1988. He was the company's sole owner until an initial public offering in 1997. Although Anschutz's investment team has confidence in Qwest's management, they want to focus on other areas, said Jim Monaghan, a spokesman for Anschutz Co., which handles the billionaire's investments.

"Like any other large investment group, they're shifting resources, shifting assets to put them in play in different areas," Monaghan said.

Anschutz, 67, is divesting the shares through forward-sale agreements that come with upfront cash payments and transfer the shares during 2009 and 2010. The contracts include provisions that will increase the payout if Qwest's stock price moves higher over the next three years.

Anschutz will receive $297.3 million in prepayments for the most recent sale, disclosed last week in a filing with the Securities and Exchange Commission. The transaction will be completed by 2010, the filing said. He also will receive the first 25% of any stock price appreciation above $8.10.

In November, Anschutz pledged to donate 53.5 million Qwest shares to his charitable foundation.

Excluding shares that are part of a forward sale or a donation, Anschutz Co. controls about 23.4 million Qwest shares, a 91.6% decline from March, when it owned 277 million shares. Fidelity increased its ownership of Qwest by 17.3 million shares to a total of 254.7 million in the period ended Sept. 30.

Anschutz, who began Qwest as a builder of fiber optic networks, held the majority of shares until 1999, when he agreed to sell a $1.57-billion stake to BellSouth Corp. He resigned as nonexecutive chairman in 2002.

Qwest shares fell 15 cents, or 1.8%, to $8.33.

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