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Strategies & Market Trends : Bosco & Crossy's stock picks,talk area

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To: PuddleGlum who wrote (3206)	12/17/2002 3:08:52 AM
From: Crossy	Read Replies (1) of 37387

re: MPOW.OB (Mpower Communications) @ $0.20 this is a CLEC/DLEC operation offering (competitive carrier)SDSL and T1 products to business customers. The company recently came out of Chapter 11, eliminated 90% of debt (carrying 13% interest) and got rid off its Preferred stock in the process. 60m common shares are out. Recently Mpower has redeemed all the remaining outstanding longterm debt through open market purchases at a fraction of face value. Operating results have been steadily improving. While EBITDA is still negative, they now feature improved Gross Margins (around 40% - quite high for a DSL CLEC). Discretionary item SG&A looks like further containable. Book value after debt repurachse around $1.50 per share. Price/Book amounts to approx. 0.15. The CEO has implied either a financing or a "strategic transaction" at the time of debt repurchase. I do know this is risky but Gross Margins aren't any worse than with ILECs here and with either a financing or a merger they would be an accretive operation. They would add immediate value to any mid to large size CLEC like CTCO, ALGX, TWTC, MCLD etc.. I did some DD and uncovered that those notes had some very restrictive covenants precluding expansion, new financing or a merger. best rgrds CROSSY

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