I'm not sure how the new loan and interest payments will end up being reflected on the books, but it seems to me that net interest expense should be pretty nasty going forward. The situation will worsen each quarter, but here is just the first quarter of the new debt load:
$326,000,000 cash infusion from debt (assuming gross proceeds = net)*
+ 41,000,000 cash remaining from IPO (cash and short term invest.)
- 75,000,000 pay-off of loan
=$292,000,000 cash on hand on 5/1/98
How much cash is being used for the new acquisitions? 1 of these (can't recall which one) requires a cash payment. Assume $55,000,000, which is about the same as the deferred charge. (If only the amount would be disclosed, I could be more accurate about this.)
$292,000,000 cash on hand
- 55,000,000 acquisition payment
=$237,000,000 cash on hand on 5/1/98
$326,000,000 starting face value of loan (it increases each 1/2 year)
-$237,000,000 cash on hand
=$ 89,000,000 net debt
Interest on $89,000,000 net debt is about $2,225,000 per quarter = 9 cents/share.
Compare that to 1Q98, which had net interest expense of only $385,000, or 1 cent/share.
Gary Korn
* The $326,000,000 is gross proceeds. Anyone have any idea how much Morgan Stanley Dean Witter will take off of the top??? |
