Alcatel-Lucent is in talks with Goldman Sachs in a bid to secure a loan deal to stave off further unprofitability, Bloomberg reports, citing a number of people familiar with the discussions.
According to the report, the New York-based investment bank would finance the ailing telecoms giant in return for offering some of its assets as collateral. The deal is yet to be finalized, however.
Earlier this month when the Paris-based firm announced its third quarter results, Alcatel-Lucent's chief financial officer warned that it may have to sell off assets to strengthen its finances, along with cutting 5,500 jobs worldwide. The firm's cash balance stood at €4.7 billion ($6.05bn) after burning through €1.03 billion ($1.33bn) in the first nine months up to the end of September.
The firm is exploring the possibility of selling off certain assets, such as the fiber-optic cable manufacturing division and the firm's enterprise unit, which offers telecoms equipment to businesses. Alcatel-Lucent already supplies technology to a range of cellular networks, including AT&T, Verizon, and France Telecom.
Another possibility for the ailing firm is to sell off its 29,000-strong patent collection, including voice-recognition and video conferencing While a patent sell-off or licensing agreement may not deliver any more than a few hundred million euros, it would be enough to stabilize the firm in the short term.
The company's balance sheet looks anything but healthy as a result of increased European competition from Finland-based Nokia Siemens Networks and Sweden-based Ericsson. Only Ericsson is holding the fort in the European telecoms equipment-making sector, as Nokia's telecoms arm is looking for a potential buyer in hope they can rescue the firm.