Telecom equipment maker Alcatel-Lucent agreed a 1.6 billion euro ($2.1 billion) financing deal, backed partly by its patents, that could buy the loss-making group time to cut costs. The Franco-American company has been hit by competition from low-cost Chinese rivals and lower spending on network gear by global telecom operators.

Chief Executive Ben Verwaayen is racing to cut 1.25 billion euros costs by the end of 2013, via layoffs and exiting unprofitable countries and contracts, to staunch an average annual cash burn of 700 million euros. The Dutch executive has struggled to fulfill a pledge made when he arrived in September 2008 to make Alcatel-Lucent a "normal company" with regular profit and healthy cash flows. The senior secured credit facility will be backed by the group's 29,000 patents, among other assets, and was expected to be completed in January. Denominated in dollars and euros, the debt will have maturities ranging from 3-1/2 years to six years.

Copyright Reuters, 2012