WEDNESDAY, DEBT TRADERS tell me, MCI WorldCom spent $100 million dollars to purchase what remained of Wireless One's bonds. That would make its holdings of this company's various debt securities almost complete at what I am told is about $280 million in accreted value.
While the company is in bankruptcy, it has already filed a plan of reorganization that would return some value to equity holders. But its stock price is likely trading above the value implied under that plan on speculation that MCI WorldCom will, as it did with CAI Wireless, make an offer for the equity above current market prices, despite owning the debt.
Wireless One CEO Henry M. Burkhalter told me he could not comment on what, if any, talks were taking place with MCI regarding a sale of Wireless One. An MCI WorldCom spokesperson declined comment.
While MCI WorldCom could try a so-called “cram down” — since it owns roughly 85 percent of the company's debt — investors are hoping it takes the easier route of simply paying for the equity as well.
Recent transactions in this area have varied, but have been climbing to as high as $50 per line-of-sight home. Wireless One can reach between 9 million and 11 million line-of-sight homes. At the midpoint of that estimate at $50 per home, it's total value would be $500 million. Subtract its debt and you are still left with a value for the equity above its current price.
WILL MCI WORLDCOM PAY UP?
But that depends on MCI WorldCom's willingness to pay up, something it has been willing to do in previous transactions and that investors in Wireless One clearly hope it will do again.
The last wireless cable deal done by MCI WorldCom, the purchase of Prime Cable's wireless properties in Los Angeles, was clouded under secrecy since it was a private company. I'm now hearing, however, that the deal was done for about $57 per line-of-sight home — or more than $300 million.
When MCI WorldCom is finished with this wireless cable foray, which I first reported was about to begin in late March, it will have spent more than $1 billion dollars on the debt and equity of wireless cable companies. All of it in order to grab control of the MMDS spectrum that these companies own in order to use that spectrum for voice and data applications in bypassing the local phone companies' lines.
Complete article can be found at msnbc.com |
