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The Fat Lady Prepares to Serenade ICG Shareholders
By Tally Goldstein
Staff Reporter
9/19/00 4:54 PM ET
"It ain't over till it's over," as Yogi Berra said, but that's likely to be small solace for ICG Communications (ICGX:Nasdaq - news) shareholders. For them, the end is near.
The Englewood, Colo.-based local phone carrier hasn't filed for bankruptcy yet, but it's only a matter of time. And probably not much at that, investors and analysts agree.
In the past two days, ICG has lost 80% of its value and is off 98% from its high of $39.25 this spring.
In addition, ICG's assets are worth a negative $1.5 billion and it has just lost the future financial support of two of its biggest investors, says telecom analyst James Ott of Hibernia Southcoast Capital. (Ott rates ICG a hold and Hibernia hasn't performed underwriting for the company.)
The latest blow to the beleaguered stock came Monday morning when the company said it would miss second-quarter earnings targets due to technical problems. On Monday, the stock fell 58%. Then Tuesday morning came the news that Chairman and CEO Kevin Vogel was stepping down, along with board members Gary Howard and Thomas Hicks. The shares plunged another 50% today, sinking to a low of 78 cents. The stock closed at 87 cents.
The departure of Vogel and Howard, who are from AT&T (T:NYSE - news) subsidiary Liberty Media , along with Hicks, who is from private equity firm Hicks Muse Tate & Furst, is the final nail in ICG's coffin, many believe. Liberty Media and Hicks Muse own 23% and 10% of ICG, respectively.
"The party's over. That's it. ICG is done," says one telecom hedge fund manager, who asked to remain anonymous. "ICG has lost all credibility. It screwed Liberty, screwed Hicks Muse. It misled Wall Street. It has no access to capital now whatsoever."
And ICG needs that capital. The company has revised its projections for earnings before interest, taxes, depreciation and amortization for 2001 several times (one time it actually raised that estimate), most recently cutting projections to between $100 million to $150 million from $300 million.
Even when ICG expected $300 million in '01 EBITDA, it wasn't going to be cash-flow positive for at least a few more years, the investor says.
And the company has about $4 billion in short- and long-term debt. Assets, on the other hand, total only about $2.5 billion.
This leaves the company up the creek, and with the most recent announcements and price plunge, every paddle has been smashed. "Unless someone comes in with money, I think bankruptcy is the only option out there," Ott says. "ICG is $1.5 billion under water." |
