Global Crossing - GX (formerly GBLX) Message Board

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Technology Stocks : Global Crossing - GX (formerly GBLX)

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To: Teddy who wrote (1481)	8/25/1999 8:36:00 AM
From: Teddy	Read Replies (2) of 15615

This is two weeks old, but still interesting: GBLX: Stock Way Oversold; Reiterate Buy and $70 Target Salomon Smith Barney Wednesday, August 11, 1999 ....We believe that GBLX is greatly oversold due to investor concerns regarding its proposed merger with Frontier. Both companies remain committed to this merger and we continue to believe that the merger will be completed in the September/October time frame. We would be aggressive buyers of GBLX and FRO at these levels and continue to believe that the combined company has a great collection of global assets that will drive a lot of growth. As far as valuation is concerned, currently the firm value/EBITDA for the combined GBLX/FRO is roughly 16.5x. We estimate the combined GBLX/FRO 2000-2004 EBITDA growth is 30-35%, which means that GBLX is trading at roughly half of its EBITDA growth rate. We believe a steady state multiple is at least 80% of its EBITDA growth rate and greatly above where the stock is trading currently. Based on only one year out proforma 2000 EBITDA of $1.5 billion, GBLX's firm value is estimated at $36-42 billion and with proforma net debt by our estimates of $2.3 billion, we believe GBLX is worth at least $45 per share. On a DCF basis GBLX is worth more given the growth opportunities of the combined entity as GBLX upgrades its systems and builds additional systems beyond 2000. It is also important to note that our estimates do not include many synergies and may prove to be conservative with regard to the service business and global contract opportunities. ...... NET/NET: GBLX stock is way oversold and dirt cheap, especially considering that we believe the deal will be completed in the September/October time frame. We would be aggressive buyers of both GBLX and FRO at these levels. We continue to believe the GBLX/FRO assets are a great collection of assets that will drive a lot of growth.

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