PSIX filing bankruptcy has been the word around everywhere for the last few months. I'm going
to assume your question is a serious one and respond in kind.
1. Look at the facts: Well we have none. Ok,not exactly true, but we have little to go on. All we can go on is probabilities and assumption. At this point, it really doesn't seem necessary for Psinet to file chapter 11. They should have at least 500 million in cash at this point,if not a bit more. That's without selling anything.
Merrill Lynch, in a recent report, feels comfortable with their short term situation, though they,along with most, point to a long range funding gap that will need to be resolved.
Capital markets probably will stay dry but w/rates on the decrease they can't help but get better in the second half of the year and going on into 2002.(will be slowgoing I'm sure).
Of course, we can always assume that the steady accumulation over the past 4-6 weeks would point to "smart money"(not sure if they're any "smarter" but that's another topic) being comfortable w/the risk. Whether they know more or not about financial details is unknown, but they're risking a lot more than we, the smaller investor,are.
Then you've got the sale of assets. Psinet management(what's left of it) evidently felt that the purchase of these assets would make them stronger. You've got to assume that if they were profitable they would not be selling them off(Inter.net notwithstanding). If they filed bankruptcy now, or 3 months ago, or even 6 months ago, then they probably don't have to sell anything off. So the sheer fact that they're willing and have probably sold some already(read into K.Libby's emails.) indicates that cash is still foremost to them, even if it means sacrificing parts of their initial dream(see Internet Super Carrier) and perhaps selling at a loss.(please delete the word "perhaps"...thank you)
2. Look at the source:
You have a friend at Nortel, huh? Even the CEO of Nortel, unless he's on the BOD, would have no idea of what's going on behind closed doors. There may be indications(i.e. Psinet closing accounts, losing contracts, not making payments on time or at all..etc), but no one really knows till you read it in print.
3. As far as restructuring debt, who knows? Really doesn't make sense to discuss it unless it happens. Until then it's just a baseless recycled rumor.
Current rumor(let's see,FON and CWP hasn't panned out)...oh yeah, I think we're up to a TNS sale for 325million, perhaps to XO or FON. Let's see if this rumor bleeds out or comes true. Didn't even tickle the share price when it came out so I don't put much stock in it or any effect it might have on the share price.
regards,
cg |
