Here are Star's CEO's comments with regards to today's downgrade by Kaufman:
Christopher Edgecomb, STAR Telecommunications' chairman and chief executive, stood by his company and the merger with PT-1, slated to close in the third quarter, describing Kaufman Brothers analyst Grover's comments as "false." For example, Edgecomb said neither STAR Telecommunications nor PT-1 is currently losing distributor customers. "Every month we do more in revenues than the month before," he said.
Responding to Grover's assertion that PT-1 is at risk of noncollection of accounts receivable, Edgecomb said, "Bad debt write-off at PT-1 is less than 1%, which is an industry-leading number." He added that the debit card business is unique in that the seller has the option of simply "deactivating" - and rendering useless - any cards that haven't been paid for in the allotted time.
Most of PT-1's credit terms allow 10 or 15 days for payment, and its most generous credit policy of 30 days is extended only to long-term clients, he said.
In response to Grover's allegation that PT-1's management team is experiencing turnover, Edgecomb said, "It's absolutely untrue to say that a senior manager has left." PT-1. Vice presidents and above have signed contracts to remain with the merged company after the deal is finalized, he added. Finally, he said that an audit on PT-1, conducted by KPMG Peat Marwick, will be released within two weeks.
"We don't see any pending regulatory difficulty," he said of the merger. Edgecomb said he first learned of Grover's views in an e-mail Tuesday morning.
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