Seth, VS, et al
in talking to the company a couple of weeks ago, I gleaned the following:
1) Sutro is setting up a private placement of FNET preferred stock. The conversion of these shares will be at a FIXED price, which will thus have a relatively small impact on the share price. There should be little or no impact on the FTEL share price, only on that of FNET, and of course only after FNET start trading.
2) FNET owes FTEL mucho dinero; so although the bulk of the PP will go towards new JVs, more countries, other DVG sites, etc, FNET will be paying FTEL for what it owes to date, plus placing whacking big orders for DVGs. FTEL won't need a PP.
I've been playing with some spreadsheets, and feel the FNET business plan is spot on. If they really had to, they could slip into the black in just a few months even WITHOUT the PP - but at the expense of sacrificing expansion and future earnings.
With my model, beyond about 40 foreign DVG sites expansion and cash flow go ballistic. Plowing cash back into the business is the way to go.
With the FNET PP, this process gets a huge kick in the rear, and FNET gets a super shot at the brass ring. |
