360networks buoyed by word of Alcatel plan
By PETER KENNEDY
20:19 GMT-04:00 Thursday, April 26, 2001
Vancouver — 360networks Inc. got a boost Thursday when one of its key suppliers, Alcatel SA of France, indicated its willingness to continue working with the telecommunications firm.
Published reports said Alcatel is studying a new business plan for 360networks even though it has decided to take an undisclosed writedown relating to a $700-million (U.S.) investment in the Vancouver-based company.
Alcatel officials couldn't be reached, but 360networks spokewoman Michele Gagné said the report is viewed as a vote of confidence in the company's plan to build a $7-billion fibre-optic network.
Investors, who had worried about 360networks' ability to carry out such an expensive business plan, seemed to agree, sending the company stock price up 58 cents (Canadian) to $2.73 on the Toronto Stock Exchange. On the Nasdaq Stock Market, the stock rose 39 cents (U.S.) to $1.77.
"This is an implication and suggestion of good news to come," said Stuart Isherwood, a telecommunications analyst with UBS Warburg in Toronto.
Ms. Gagné declined to be specific on the discussions with Alcatel, saying only that it could lead to some changes to 360networks' plan. The global network of fibre-optic lines are designed to carry phone calls and Internet traffic on beams of light across glass strands.
Slated for completion in 2002, the network is designed to link 100 cities in North America, Europe, South America and Asia.
However, Mr. Isherwood said discussions with Alcatel likely will focus on the 22,000-kilometre transpacific part of the network.
When the two companies formed a strategic alliance last October, Alcatel agreed to invest up to $1-billion in convertible preferred shares of 360networks, including $700-million initially. The balance is due when the Vancouver-based company commits to build a second Atlantic cable and places orders for $100-million worth of Alcatel's terrestrial products.
Under an agreement worth about $1-billion, Alcatel is responsible for designing the transpacific network, as well as suppling submarine transmission and protection equipment.
Christian Reinaudo, the head of Alcatel's optics division and a member of 360networks board, told Dow Jones Thursday that the contract doesn't include a termination clause.
Another Alcatel official said the as-yet-undisclosed writedown, which analysts believe will be in the $200-million range, is necessary to compensate for the potential conversion of 360networks' bonds.
Under the agreement reached last October, the $700-million that the French company agreed to invest will be convertible into 360networks common shares at a price of $21.72 a share.
The fact that Alcatel is studying a new business plan for 360networks implies that it will consider providing further support to the Vancouver company, Mr. Isherwood said.
This week, 360networks said it is in full compliance with all covenants under a $1.2-billion senior secured credit facility.
Ms. Gagné said the statement was in response to inquiries from investors who feared that the company might not be able to meet debt payments, including one for $50-million that is due May 1.
Copyright © 2001 The Globe and Mail
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NEVER SAY NEVER! (unless it's too late ;^>)
Looking for a nice run over the next couple of days...
Regards, Rob |
