$300 million cash for $12.4 bn in debt, that's 2.5c on the dollar. Plus 21% of the new company = 21% of $10 billion in assets, assuming some serious depreciation on construction costs, which is $2 billion in assets [give or take a bit]. That's 16c per dollar of debt.
Which gives 18.5c in value for current debt value of about 4c or so [depending on how the assets are valued in the new company].
If the total assets are valued at only $2 billion [I'm sure they are worth more than that given the demand for fibre communications which is developing] then there's still 5.5c in value per $ face value of debt.
Nobody can build Global Crossing's assets for $2 billion, so it's a great bargain at 6c in the dollar.
From the Global Crossing website [under "Investors"]http://www.globalcrossing.com/xml/news/2002/january/28.xml
28 January 2002:
<...Under the terms of the proposed investment, which is conditional on, among other things, the confirmation of a plan of reorganization by the courts before the end of August 2002, creditors would share in a combination of cash, new debt, and new equity in the restructured company. Existing common equity and preferred shareholders would not participate in the new capital structure....>
New debt too! So, even at only $2 billion asset valuation, creditors would get a bunch of debt [maybe another 4c worth for a total of at least 10c in current value].
Mq |
