Torus, a tough calculation. Right now the value is worthless because of the lack of funds to meet debt and the fact that they cannot meet their covenants for the end of April. However, they do have a viable network built out in 43 markets and IDT does have a ton of excess capacity coming up in their pipes with the TYCO fiber deal, the Telefonica fiber deal and existing leased fiber from frontier.
If you take a look around their website you can see a description of what they do and the markets they are in.
navigation.helper.realnames.com
A review of their 10K filed 3/30/01 shows.
As of March 30, they had 194M in cash not the 260M that shows up in a market scan.
They owe 1 billion 540M, not the 1/4B reported by the WSJ.
They have 42M class a shares traded publicly traded
21M class B shares not publicly traded.
Their main equipment vendor is Nortel.
They do have joint venture arrangements with major partners in Germany, Spain, Hong Kong,, Argentina and France/
They are projecting capitol requirements of 250M for the year.
They had 2357 employees and cut that back by 172 earlier this year.
Some significant financial descriptions and covenants are as follows:
"As of March 26, 2001, we had outstanding $300 million aggregate principal amount of 11.5% Senior Notes due 2007, $440 million aggregate principal amount of 11.5% Senior Discount Notes due 2008, and $800 million under our existing
credit facility. These debt instruments impose significant operating and financial restrictions on us, including certain limitations on our ability to incur additional debt, pay dividends, redeem capital stock, sell assets, engage in mergers and acquisitions or make investments, transact with affiliates, sell stock of subsidiaries and place liens on our assets. In addition, our credit
facility contains certain covenants, including covenants regarding the achievement of certain financing and performance targets and the maintenance of certain financial ratios.
We received a waiver of the fixed charge coverage ratio for the period ending December 31, 2000 from the lenders as a part of an amendment and consent to our existing credit facility. We were in compliance with all other debt
covenants of the existing credit facility as of December 31, 2000. Failure to observe or perform one or more of the covenants at any given time will require us to obtain a waiver or consent from the lenders, or refinance our credit
facility. Such a waiver, consent or refinancing may not be available to us on reasonable terms. A breach of these covenants, ratios or restrictions in our credit facility also could result in an event of default. Upon the occurrence of an event of default under our credit facility, the lenders could elect to declare all amounts outstanding under our credit facility, together with our
accrued interest, to be immediately due and payable. Our failure to comply with any of these covenants or restrictions could also limit our ability to obtain
future financings.
As part of the amendment, we are required to deliver definitive documentation with respect to vendor financing (in an aggregate amount of at least $250 million) and convertible notes (in an aggregate amount of at least
$100 million), no later than April 30, 2001. We are attempting to secure vendor financing in the amount of $250 million. If we do not meet the April 30, 2001 deadline described above, we will be in default under our credit facility unless we receive a waiver. There can be no assurance that we will execute either the vendor financing or convertible notes by such date or at all. In addition, the Company has a new financial covenant that requires compliance effective June 30, 2001 for which there can be no assurance."
IDT's fiscal year ends 7/31, they must resolve their tax situation by then.
TGNT's covenant expires the end of April.
According to David Faber, TGNT's bonds trade at 1/4 cent on the dollar and their bank debt at 16 cents.
cnbc.com
I expect that between Malones shares and Hicks, Muse, Tate & Furst Inc and maybe MSFT's 8%, IDT might have spent 20M to control the board. From that point I expect they would negotiate for and extension on the April covenant in order to gain time to buy the debt if they haven't done so already. It appears they could have the whole thing for about 150M.
At that point they control the cash and tax carryforwards.
That's where it gets murky for me. Given the amount of money this company loses BEFORE debt expense, I cant imagine that HJ and IDT would be interested in owning it going forward unless they have a plan for restructuring that would change that. I can't imagine IDT taking on over 2000 new employees. So, unless IDT plans to takeover the company and eliminate 60% of the staff and other expenses making it accretive somehow it doesn't makes sense in any manner except for the tax savings.
Guess we'll know soon enough.
For the near term, I expect TGNT's shares to go up. |
