There were questions before on GX's level of debt. I had a look see today at the 10K for year ended Dec 31/00 today, and this is what I saw:
Long term debt total = $6,425 million, out of which $1,612 matures 2004, and $4,086 matures beyond 2005. Yearly interest to service the total debt is approximately $580 million.
Preferred stock total = $3,158 million. $488 million is mandatorily redeemable by year 2008, although GX can redeem it earlier, starting in 2003. The others are convertible to common stock, also with early redemption rights, starting as early as 2004 at specific premiums declining to par at 2010. Total yearly dividend is approximately $298 million.
So, annual debt service is $580+$298= $878 million. With projected $7.2 billion in cash revenue, it doesn't appear that debt servicing would be problematic. Also, if it comes to a crunch, the $298 "dividend" could be delayed.
Included in the long term debt is credit facility (variable rate of LIBOR plus) of $2.5 billion. With rates going down, there would be less interest to pay.
There is $1 billion short term debt (bridge financing) due April 10,2002 upon closing or abandonment of the Frontier sale at LIBOR + 1%. Even then, there is a safe guard (which seems to confirm Martin's comments that Winnick is a master in debt financing) in that, should the lender discontinue the bridge loan, a bank syndicate will fund the loan t LIBOR+ 2.25% i.e. more expensive but a fall back. When the Frontier sale closes, the cash flow of $3.7 billion will be used to pay off this $1.0 billion loan, and the balance $2.7 billon is to be used for this year's capex budget of $5.0 billion. So, if the Frontier deal is abandoned, the consequence is on capital expansion for this year, and not an issue of whether the comapny has enough funds to service debt. The cash flow from Frontier (if it is not sold) would be used to continue servicing the $1 billion short term loan, until re-negotiated. |
