After reviewing bids from a flurry of suitors, limping telecom Qwest(NYSE: Q) agreed to sell its yellow pages directory business for $7.05 billion to private investments firms The Carlyle Group and Welsh, Carson, Anderson & Stowe. The agreement provides cash for the desperate, debt-laden, and downtrodden company, whose cool fiber optic network commercials have long been missing from TV. Qwest shares vaulted 25% on the news.

The deal will go down in two parts, with the first for $2.75 billion covering seven states' yellow pages operations scheduled to close in Q4, and the second for $4.30 billion and the remaining seven states closing in 2003. The leveraged buyout is said to be the largest since the $14 billion, 1989 takeout of RJR Nabisco. Lenders reportedly include J.P. Morgan Chase(NYSE: JPM), Lehman Brothers(NYSE: LEH), Wachovia Corp.(NYSE: WB) (to whom we say, don't let anyone Wachovia), Deutsche Bank(NYSE: DB), and Bank of America(NYSE: BAC).

Qwest sags under the weight of $26.3 billion in debt. Much is soon due, forcing the company to swallow a $500 million loan at the highly unFoolish rate of 13.5% (hey, we know better debt options). Observers believe that the new cash will keep Qwest afloat for a few years -- no matter how its numbers imbroglio works out with the SEC. Investment management firm Legg Mason(NYSE: LM) apparently agrees and upgraded the stock. Merrill Lynch(NYSE: MER) can't make up its mind, with reporting both "near term reduce" and "sell" recommendations.

The Carlyle Group is the refuge-du-jour for influential government types such as former British Prime Minister John Major, former Secretary of State James Baker, and former SEC Chairman Arthur Levitt. It plays in the same league as privately held engineering-construction firm Bechtel Corp., whose masthead has included Casper Weinberger, George Schultz, Richard Helms, and W. Kenneth Davis.

Time to buy Qwest? Tell us on the Qwest discussion board!