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To: dbblg who wrote (744)	10/4/1999 2:21:00 AM
From: SteveG	Respond to of 1860

bingo and thanks for the contribution Ganesh (one of my favorite incarnations, if i may say so) and i see that Mark Lewin had already caught and posted this update from a recent Dow headline on the RCNC thread.

To: dbblg who wrote (744)	10/4/1999 2:31:00 AM
From: SteveG	Respond to of 1860

for posterity, let's put it here (the other shoe being an expected shortfall pre-announcement): Financier Is Said to Acquire a Significant Stake in RCN By SETH SCHIESEL Vulcan Ventures Inc., the investment group controlled by Paul Allen, has made its biggest move yet into telecommunications by agreeing to invest about $1.7 billion in the RCN Corporation. The deal is set to be announced Monday, RCN said Sunday. RCN, based in Princeton, N.J., is the biggest company competing against the regional Bell carriers in local telephone markets for residential customers rather than corporate clients. RCN also provides cable television and Internet service to its customers, mostly in the Northeast. The stocks of competitive local phone, or exchange, companies (known as CLEC's and pronounced SEE-lecks) have been exceptionally volatile in recent years as investor sentiment has fluctuated about the power of the Bell companies to face competition. But given Allen's reputation as a billionaire financier and one of the founders of the Microsoft Corporation, the Vulcan investment may give the CLEC sector a lift. At least as important, the deal appears to lend some validation to RCN's plan of serving the residential sector rather than the business customers that have been the traditional market of CLEC's. Additionally, CLEC's of every stripe have traditionally relied heavily on the high-yield bond market for money to build expensive fiber-optic networks. The companies' stocks have sometimes suffered as interest rate concerns have raised questions about their ability to raise money economically. With the Vulcan deal, RCN may be able to insulate itself from those concerns. "This gives us $4 billion in cash, which is enough capital to build our business without having to go back to the capital market," David C. McCourt, RCN's chairman, said yesterday. He added that with the deal RCN would have enough money to last through 2003 without need of more financing. Before the deal, RCN was faced with the prospect of requiring additional cash in 2001. "It's validation of our business plan from someone who understands where the telecom industry and the Internet is evolving," he said. "Paul Allen understands the ned for broad-band connections to the home." Until now, Allen has invested in broad-band -- or high-capacity -- connections mostly by buying into the cable TV industry. Allen's cable vehicle, called Charter Communications, has spent more than $6 billion acquiring cable carriers including Avalon Cable Television, Falcon Communications and Fanch Communications. In August, Vulcan announced a deal to invest in another CLEC, Allegiance Telecom Inc., which focuses on business customers. But that was a much smaller investment, beginning at $75 million and potentially reaching $355 million. In the RCN deal, Vulcan is to invest $1.65 billion for a stake of roughly 22.7 percent. Vulcan has already bought almost 5 percent of RCN on the open market, an executive close to the deal said, which would bring Vulcan's total interest to about 26.7 percent. But Vulcan's voting interest will be limited to 15 percent. The new investment is in RCN preferred stock that is convertible into common stock in up to seven years at $62 a share. RCN's shares closed at $38.0625 on Friday, down $2.9375, amid speculation that RCN was considering a diluting acquisition of its own.