re 'Buffett bailing out Williams'
Warren is the lender of last resort, being so conservative that he's always 'cash rich.' But his cash comes at a price. He wants to be sure of two things: 1) there is a potential for a 'turn around', and 2) he can make a nice profit on the result.
The Williams (NOT 'WCG' but WMB, let's be clear!) deal was VERY sweet for Warren. His preferred are above the common in standing, he is already in the money at $18.75 (?), and he gets a FAT premium, at junk-bond ratings in this environment. Sure, WMB is breathing easier... but the fact they had to go to Warren for money is NOT a good sign... instead it shows they are desperate.
If LVLT needs money and is *able* to talk Warren out of some, it WILL be 'good' for LVLT but it is NOT a 'good sign.' Similarly, Warren is agnostic in regards one carrier or the other. It's ALL about the money.
PS Note that NOT all of Warren's plays work out. Sometimes he loses! He should do okay with WMB, they're solid and have assets he can get his claws into, which assets will fit with others of his (like the assets WMB sold to one of Warren's companies today). I think Warren is staying away from LVLT because they cannot pay him enough, given the inherent risk in their business given the amount of debt they carry vs the offsetting limited assets (resale value not much these days) and uncertain cash-flow from sales of bandwidth. If Warren doesn't understand or cannot predict something, he won't invest. My money is that Warren WON'T invest in LVLT because there is no clear roadmap re revenues. JMHO |
