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1/30/2003

Qwest investors seek fund freeze

The Associated Press

DENVER — A lawyer for Qwest shareholders is asking a judge to freeze $4 billion in proceeds from the sale of the company’s directory business.

Shareholders represented by Milberg Weiss Bershad & Lerach have sued Qwest alleging they were misled and have lost $16.1 billion in value from the time Qwest merged with U S West in June 2000 and last year.

The shareholders want proceeds from the second half of the sale of the directory business set aside in a trust, with the money to be released to them if they win the suit.

Qwest had intended to use that money to trim its $26 billion debt load. It claims that freezing the money could plunge it into bankruptcy.

Last year Qwest agreed to sell its QwestDex directory business for more than $7 billion to a group of financiers. The second half of the sale was not expected to close until this year.

U.S. District Judge Robert Blackburn last year turned down a request from plaintiffs to tie up the $2.8 billion from the first part of the directory sale.

He ruled that the plaintiffs failed to prove a freeze would benefit the public interest and that the move could drive Qwest into bankruptcy.

The latest hearing was scheduled to continue through today.