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Technology Stocks : Leap Wireless International (LWIN)
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To: Dave who wrote (2392)7/18/2002 7:29:34 PM
From: A.L. Reagan  Read Replies (3) of 2737
 
Issuing equity in exchange for debt hurts the original shareholder

Not a blanket true statement. It all depends on the price and what happens in the future.

Let's say for kicks and grins that LWIN had actually issued 20 million add'l shares at the beginning of the year when the stock was selling for $15 ps - and used the $300 mil of proceeds to retire (at that time) around $400 mil of 13% coupon debt. Do you think that had that happened today's price would be $1.39?

Re: Nextel, my understanding is that their debt extinguishment was a combination of equity swap plus utilizing cash flow from ops - if that is the case, it does, to an extent, validate their business model.

I think Ralph's got it right.
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