Global Crossing - GX (formerly GBLX) Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Global Crossing - GX (formerly GBLX)

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Bimini who wrote (2959)	10/29/1999 3:20:00 PM
From: Robert Sheldon	Read Replies (5) of 15615

Why we should be cheering the Convertible deal . . . 1) Cash to build out the network. As we saw on the CC, the largest and longest duration contracts being signed by GBLX are for network wide bandwidth, not point to point. This cash will allow the exponential creation of value. 2) Allows GBLX a continued time (first to market) advantage. It is virtually impossible for anyone to get financing (reasonable or at all) at this time. It really is a vote of confidence to see GBLX so easily (I have not heard any screaming) obtain these funds. 3) It is not dilative to us unless we arrive at $45, the conversion is exercised, and the funds utilized to build out the network or purchase assets have not begun to generate cash flow. 4) This deal continues to align management with shareholder interests. It effectively ties up the cash flow in debt service by making the managers owners (shareholders look for bottom line while managers generally look to revenue growth). This means that the managers would have to own the company (which they mostly do) while the bond holders tie up cash flow. The result is the managers being tied to the value of the equity and cannot rely on the cash flow for their wealth creation. They in the end are forced to obtain outside capital (which is what us shareholders want to see – not unnecessary dilution). It also sets up a scenario where by GBLX looks unappetizing to a potential suitor that is bent on exploiting shareholders returns for its own quick profit. 5) Finally, I am surprised to find so many folks concerned about this deal (as would be indicated by the stocks movement) . . . we all knew a bond offering of some type was coming. Various sources in the press and elsewhere have reported that something of this nature was brewing for at least two weeks . . . perhaps the shorts are wading deeper into their positions. Considering the most recent short interest numbers have contracted only about 1MM shares from 26MM to 25MM (Oct ) there appears to be a number of persons out there that are bearish on GBLX. We could be setting up for a really nice squeeze sometime next year when we “really” see backlog ramp ($0 to $2BB in the last 12 months isn't to shabby is it?).

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next