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Technology Stocks : WCOM
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To: KyrosL who wrote (10038)5/13/2002 1:12:41 PM
From: Thomas Walker  Read Replies (2) of 11568
 
It seems that the extension of their lines of credit is the key element with WCOM. They get more short term credit, they could use it to buy back some of their debt at a significant discount, once they have set asides to handle any surprize earnings shortfalls (just in case). That lessens the liquidity concerns. They also use their cash flow to buy down debt as well.

I also see them buying different maturities of debt. The short term debt (due in the next 2 years or so) lessens the liquidity concerns. But, buying back the longer term debt that is discounted higher, lowers their overall debt picture. So if they had $2B to buy back debt, they could decrease the overall debt by about $3-4 billion, depending on how they split up buying it back. They probably need debt down to around $20-22B or less before people give them some slack and that could take quite awhile.
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