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Technology Stocks : Winstar Comm. (WCII)
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To: Alejandro who wrote (5673)5/2/1998 11:13:00 PM
From: Jason Cogan  Read Replies (3) of 12468
 
Ali;

<<Jason: You are correct that others would be paid before the shareholders. However, this would only happen in liquidation.>>

Not true. Debtholders always rank senior to shareholders, and have priority for their cash flow. It's kind of a question of semantics, but I prefer to look at the true nature of the liability.

It will be difficult if not impossible for equity holders to take out cash flow from the company without first retiring the existing debt holders. New debt holders might replace them, which is another story. But one way or another, probably from cash flow, the existing debt holders will be paid first. This is why I say the first $2 billion of cash flow is already spoken for.

Regards,
JC
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