Kingpin - Continuing from WCII:
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Blurb:
"..Intermedia Communications offers its customers an alternative to the local telephone companies in Florida and the southeast US. Its services include voice, data, and video communications, which are provided over the company's own fiber networks and other leased facilities. It provides standard long-distance telephone service to over 8,000 customers and is working to expand its fiber network to include markets in Alabama, Missouri, North Carolina, and Ohio. The company's DIGEX subsidiary offers national Internet services, including dedicated connectivity and corporate Web site management services. Intermedia will nearly double in size with its purchase of phone systems provider Shared Technologies Fairchild..."
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S&P's recent credit rating analysis:
"..The rating profile reflects progress the company is making in diversifying and growing its revenue stream and customer base, the success ICI has had in obtaining interconnection agreements with local
telephone companies, and the general improvement in the company's ability to provide integrated telecommunications services to business and government customers across a wider geographic area.
Despite these positive developments, ICI still faces challenges stemming from rapid development of a business with a still limited market presence and substantial capital spending requirements. Earnings before interest, taxes depreciation, and amortization have been negative, but are projected to turn positive in the first half of 1998.
The company continues to expand its service offerings and the number of markets served, and will incur substantial capital and marketing costs to do so. ICI's internal growth and geographic presence have
been augmented by the integration of acquired network and service companies. The company currently has agreements to acquire Shared Technologies Fairchild Corp., a shared tenant service provider, and
LDS Communications Group, a switch-based long distance company serving Texas, Oklahoma, and Louisiana. Shared Technologies will expand the customer base, and ICI expects to realize savings from migrating Shared Technologies' traffic to its network facilities. The LDS acquisition will substantially increase ICI's presence in Texas. ICI will pay about $700 million and issue $120 million of stock to
complete these transactions.
As adjusted for the issuance of $175 million of preferred stock and $350 million of debt as well as the defeasance of an existing debt issue in the fourth quarter of 1997, the pro forma cash balance at Sept. 30, 1997 was about $500 million.
OUTLOOK: STABLE
Risks stemming from ICI's aggressive business development are somewhat offset by anticipated near-term strengthening in operating cash flow and the company's practice of prefunding capital and cash debt service needs, Standard & Poor's said. --CreditWire ..."
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Peering relationship with US West:
biz.yahoo.com
Currently 17.3MM shares outstanding and a float of ~7MM.
Zack's show 10 #1 and 5 #2 ratings. Robbbie Stevens initiated last month with their #1 on the same day that SBC Warburg DR downgraded from #1 to a #2.
If as you say their plant is valued at $500MM, the potential for takeover DOES make it intriguing (wish I tuned in last Mar/Apr though)
Takeout price between 90 and 120 certainly seems reasonable shorter term. As they continue to expand and get EITDA positive, their value clearly INCREASES. I would like to see it retest or at least approach it's 50 day.
You gonna take a shot Kingpin? The September 60 calls are trading at about a 9 point premium, fwiw (~$13.625), and might be the beter leveraged play. Somewhat illiquid though.
I'll sniff around more this week. Tomorrow I'm doing ROK (meeting with management, tour of their chip facilities)
Steve |
