Metromedia Fiber Funding-2: Vendor Financing A Challenge
01 Aug 16:18
While Metromedia Fiber has until Aug. 15 to come up with new funding sources,
some analysts remain doubtful the company will be successful.
Jim Friedland, an analyst with Robertson Stephens, put the company's chances
of concluding its needed financing at 50-50. Getting the $180 million affiliate
commitment is contingent upon getting $200 million in vendor financing.
"They don't actually have anything yet," Friedland said.
Vendor financing will be hard to find, said Victor Valdivia, an analyst for
Hudson River Analytics, an independent research firm specializing in
telecommunications.
"We think that is going to be very challenging to do in this environment,"
Valdivia said. "We follow many other vendor companies and they are really
tightening down on vendor financing."
Even if Metromedia Fiber can manage to raise enough for its immediate needs,
Valdivia said he doesn't think it's enough to fully fund its plans.
"If they are able to get financing at this point, we think they will have to
come back to the capital markets sometime next year," he said. "From this point
in time, it looks like that would be a challenging thing to do as well."
Investors also have to be wary of the terms that would be imposed on any
further financing, Valdivia said, adding that they may not necessarily be
favorable to shareholders.
Metromedia Fiber's assets alone are more valuable than its stock price
indicates, "but their financing plans and contingency plans were not adequate
and they over-extended themselves," Valdivia said.
If Metromedia Fiber could find a partner, that would provide financing and
the company would be worth more than it is today, Valdivia said. But that, too,
is unlikely in the current capital market environment, he said.
-Paula L. Stepankowsky, Dow Jones Newswires; 360-636-2008;
paula.stepankowsky@dowjones.com
(END) DOW JONES NEWS 08-01-01
04:18PM |
