Keith,
At close, Numonyx has a cash position of about $585 million.
Cash in from all sources (assuming all credit lines are fully drawn) is $700M. $450M + $100M from loans, $150 from Francisco Partners. If $585M is left as cash, it means STM + Intel got $125M cash combined.
Based on earlier info, it seems that STM + Intel combined are going to get between $700M and $750M out - lets say $725M, subtracting the cash out, it seems that Numonyx still owes $600M to Intel + STM.
The total debt then is $600M + $450M + $100M = $1,150M.
Liquid assets are $585M cash.
What sucks about the whole thing IMO is that Intel and STM are not completely out of the picture. All of the $1.25 billion debt is either owed to or guaranteed by INTC and STM. I would have much rather see some outside entity have this exposure. But, apparently, no creditor out there wants to risk a penny on this venture.
If there was just a consortium of creditors with this exposure, the chances are very low that they would throw Numonyx a life-line, when the inevitable scenario of Numonyx drowning materializes. But will Intel and STM act the same? They have a combined exposure of $1.15 billion, of which $600M is a non-cash assets that can be written off, but there is another $550M cash they will owe when Numonyx defaults on the term loan and revolver.
It seems to me that INTC and STM would have done better if they just shot down the operations and sold assets on a fire-sale. They would have raised as much or more cash and would not have incurred additional $550M of liabilities.
But the above firesale scenario ignores liabilities of the NOR operations - employee severance, potential commitments made to Israel and Italy in exchange for tax and other subsidies associated with the fabs.
It left me wonder about the transaction. How much of it is a face saving measure and how much it is a liability and loss containment.
But, above all, I am wondering whether Francisco Partners had their heads examined before they entered into this transaction. Between the inception and conclusion of the deal, all the creditors ran away, yet, Francisco partners is still paying $150M for pitiful 6% stake. Does it make any sense to anyone?
Joe |
