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Strategies & Market Trends : Pump's daily trading recs, emphasis on short selling
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To: Michail Shadkin who wrote (789)5/20/2001 9:20:59 PM
From: Torus  Read Replies (1) of 6873
 
I'll try to shed some light on the tax issue, with the caveat that I am far from an expert in this area. Also, at this point no one but the insiders at IDT know what they are trying to do in this regard. That said:

In February of this year IDT acquired the PT-1 debit card division of STRX for $1 and the assumption of less than $20 million in liabilities. At the same time they invested in the parent, STRX. I believe they invested about $15 million but don't quote me on that figure. STRX promptly filed for bankruptcy. I'm under the impression that IDT can write off that loss. In the last earnings conference call the cfo said something to the effect that the investment in STRX was not just a clever way to get a tax write off as had been speculated, that they really believed that STRX had a chance to turn around, and that they had taken a calculated risk. Whatever, they will still take the write off if they can.

Here's a post from someone who thinks they can do this:
Message 15429021

Over the past several weeks IDT has taken control of TGNT and ICG by buying the equity interest from Liberty Media and Hicks Muse and Tate. They have also taken over the BOD. I believe ICG had already declared bankruptcy and everyone thought TGNT was on the threshold. The valuation of these deals is difficult to find since IDT paid for the equity with shares of one of their divisions that is not yet public. Some have suggested that they got the stake that Liberty had paid more than $1 billion for, for $50 million or less. TGNT apparently has over $500 million in net operating loss carry-forwards on its balance sheet. The idea is that if IDT buys them, they get to use this to shelter their gain on the sale of Net2Phone to AT&T which is where most of the cash came from. So far TGNT has gotten two extensions from its lenders to try to structure some kind of a deal. I believe the second extension is up tomorrow, so I expect to hear something.

Here is a post speculating on this:
Message 15722342


Here's a link to the WSJ article of May 11.
Message 15786064

This is all really up in the air, but the boys at IDT have proven to be savvy deal makers. At worst they will end up with a huge amount of assets for pennies on the dollar. The tax shelter would be an incredible coup IMO. You can get details on the deals that have already been closed by checking the SEC filings and IDT's press releases. Unfortunately all the rest is just speculation until we hear their plans. I think the taxes are due this summer, so if something happens it will happen soon.

Regarding joining me at $21, I hope you never get the chance.;>
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