AOL borrows $ 200M senior revolving credit in addition to last month's borrowing of $ 350M convertible subordinated debentures show that AOL is in a dire financial situation. Look at AOL balance sheet, it shows a high deficit of working capital. Sure there is around $ 229M cash and equivalent, but it is already earmarked for current payables. Why would they need an extra $200M revolving credit if not for daily operations, i.e paying bills. That subordinated convertible debenture holder must feel uneasy with $ 200M senior debt ahead of them in repayment priority. How much more does AOL need to borrow? In its news release AOL did not say the interest rate it is paying while they are proud of indicating the 4% for the debentures. It just does show that Chase and Daichi are not suckers like those debenture holders.
That Jonathan Cohen of UBS giving upbeat analysis of AOL. Does he ever ever realize how bad AOL financial conditions is?
DULLES, Va.--(BUSINESS WIRE)--Dec. 4, 1997--America Online Inc. (NYSE:AOL - news) announced Thursday that it has secured a two-year $200 million senior secured revolving line of credit, effective Nov. 25, 1997, through a syndicate of commercial lenders in a transaction managed by Chase Manhattan Bank with Dai-Ichi Kangyo as co-agent.
Last month, America Online announced the sale of a new issue of $350 million aggregate principal amount of 4.0% Convertible Subordinated Notes due Nov. 15, 2002. In addition, at Sept. 30, 1997, the Company had cash and cash equivalents totaling $228.9 million.
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Note that from the convertible debenture, there is an obligation of $ 14M per year (decreasing after the first year), plus $ 70 to be reserved annually for repayment (one fifth of $ 350M obligations).
Good Luck
Paul |
