Lucent hit with $10bn lawsuit

NEWS Winstar claims the telecom equipment maker failed to pay $90m due under a five-year agreement and pushed it into seeking protection under the US Chapter 11 rules. Lucent is said by Winstar to have promised the money under the controversial vendor financing system, common to the major telecom equipment makers. Last Monday Lucent said Winstar had breached the agreement and the telco then defaulted on $75m worth of its debts. A Lucent spokesman, said: "This lawsuit is absolutely frivolous. We did not breach any of our obligations to Winstar." Lucent is understood to have already loaned Winstar around $700m and the telco is said to be around $6.3bn in debt. Winstar also announced it had procured $75m of 'debtor-in-possession' financing from a group of banks. This sum could rise to $300m as the case goes through the courts. William Rouhana, Winstar chairman and ceo, said in a statement: "We expect to emerge from the Chapter 11 process with a new balance sheet that has significantly less debt." Winstar has about 30,000 business customers. The telco specialises in supplying wireless broadband communications in areas that do not have high-speed wire. Earlier this month the company halted further network development and sacked 2,000 of its 4,700 staff.