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Technology Stocks : Frontier - FRO -- Ignore unavailable to you. Want to Upgrade?

To: Tim Cruise who wrote (228)	7/26/1999 4:07:00 AM
From: zebraspot	Respond to of 245

From this week's Barron's: >>Barron's Online -- July 26, 1999 Trading Points Telecom Deals Come Calling, But Arbs Don't Answer; What's Up With an Internet Junk Bond Offering? By JACQUELINE DOHERTY It seems that the price of risk hasn't quite returned to normal in the world of arbitrage. Stocks of companies that are the targets of announced acquisitions are trading well below what they'd be worth if the deal closes. The key word, of course, is if. For various snafus can always block the transactions, adding a risk that's hard to judge. Part of the problem is that there are still too many deals and too few arbs around to cause the spreads to narrow. Some believe it's because too few players returned after last year's disastrous results and the near-blowup of Long Term Capital Management. Others note that arb players have made a lot of money in recent months and may be waiting on the sidelines until deals are nearer to closing to reduce their risk. That being said, we thought we'd take a look at Global Crossing's acquisition of Frontier. The deal could close as soon as late September if regulators bless it. Global Crossing, an upstart operator of undersea fiberoptic cable, will spend $11.1 billion to buy Frontier, creating a telecom company with 77,000 miles of fiber, $4 billion in revenue and a presence in 160 cities and 19 countries. Normally arbitrageurs would step into the breach and buy Frontier shares and short Global Crossing shares. But it seems that it's hard to borrow Global Crossing shares, so arbs have had trouble building short positions. As a result, they're staying away from the deal, which may spell opportunity. As long as Global Crossing's shares stay between $34.56 and $55.78 a share, then a Frontier shareholder will get $63 worth of Global Crossing's shares. Right now, Global Crossing's shares trade around $41, well within the band, yet Frontier's shares trade at $55. That means Frontier's share price should jump sharply before the deal gets done.<< // [end of FRO relevant excerpt]

To: Tim Cruise who wrote (228)	8/12/1999 12:57:00 PM
From: Mark Svereika	Read Replies (1) \| Respond to of 245

Tim, you've probably already found out by now, but maybe this will fill in the gaps : The number of Global Crossing shares to be received by Frontier shareholders will be adjusted to produce a value of $62 per Frontier share, as long as Global Crossing shares trade within a range of $34.56 to $56.78 per share (the ?collar?) during a pricing period prior to closing. Outside the collar, Frontier shareholders will receive a fixed number of Global Crossing shares, 1.0919 shares at the top end of the collar and 1.7939 shares at the bottom of the collar. In connection with the transaction, Frontier has granted Global Crossing an option to acquire up to 19.9% of its outstanding shares at $62 per share as well as a break-up fee if the merger is terminated for certain reasons. Shareholders of Global Crossing representing more than a majority of the voting power of the Company have agreed to vote in favor of the merger. In addition, Briefing.com also likes the arbitrage play here. To me, it just plain looks cheap & attractive, given that closing of the deal should happen by Oct. Mark