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Strategies & Market Trends : Group Therapy
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To: Wolf 2 who wrote (3585)10/8/2001 2:38:51 PM
From: Logain Ablar  Read Replies (1) of 4564
 
Wolf:

I understand. If you need to really own this company may I suggest looking at some of its bonds. There are a few advantages.

1) IF the company goes bankrupt (high odds), as a bond holder the odds of your debt being converted into new debt and or equity is good.

2) You will receive a nice dividend that should be paid for the next two quarters (so you'll recoup some funds).

3) In the event the company survives then you would have a 400% appreciation plus the interest (now @ appx 40% ??).

4) The downside (over owning the stock) is if it survives is your gain is capped.

5) Bonds are always illiquid and I am clueless as to what happens in a reorg with correspondence and who represents the holders.

My problem with GX is its business model and the debt it incurred was based upon generating revenues @ a certain level (I actually did own some in early 2000) which is not attainable in todays environment. Unfortunately the telco's continued reduction in capital expenditures indicates (and a comment by GX as to why it did not meet its revenue targets) there is a limit as to what they will pay for GX's lines.

Other companies that do reorg and by definition have a lower cost of capital will be able to undercut GX competitively.

Message 16463863

Good luck.

Tim
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