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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: Jane4IceCream who wrote (25031)	4/28/2000 8:46:00 PM
From: Bob	Respond to of 57584

WCII marlinman turned me on to this company. They have received around $2 billion in contracts (over 8 years) over the past couple of months. It is my understanding, a good portion of these are contracts AT&T has received in the past. bobp

To: Jane4IceCream who wrote (25031)	5/1/2000 10:50:00 AM
From: Bob	Respond to of 57584

WCII Here's the SSB report copied from YAHOO --OPINION:------------------------------------------------------------------ We are raising our price target on Winstar to $85 per share up from our current $67 price target based on a reduction of its cost of debt resulting from its recent financing and its numerous recent government contract wins. Furthermore, the business model has been gaining traction and the company is fully funded to free cash flow positive which greatly reduces the financing risk for WCII. When WCII reports its earnings on May 4th after the close we believe they will post metrics which will exceed expectations with regard to buildings roof rights, gross margins, etc. Our estimate for roof rights is 9,000 for Q1'00 which is likely to come in at almost 10,000. Of these buildings, 2,000 will be completely on-net and we expect that number to grow to 5,000 completely on-net by year end, and 7,000 by the end of 1Q01. In addition, WCII on average has reached 20% penetration of on-net buildings due to its focus on adding higher margin, on-net customers. With the increase in on-net buildings, WCII's addressable market in terms of business customers is 55,000 which is expected to grow to 220,000 by year end. To put this in perspective, by year end WCII will probably address as many business customers around the country as a Bell like USW has in the downtown areas in their region. We believe that with each pass ing quarter WCII will continue to add more buildings on-net, increase penetration levels, gross margins, and revenue per customer as they further penetrate their customers with more services and Q1'00 will not disappoint with regard to these metrics. Our estimates for Q1'00 are $143.4 million in revenues, EBITDA losses of $58.1 million, and net adds of 90,000. Winstar will also host an analyst meeting on May 5th. We expect WCII management will present very focused and dense information which demonstrate their ability to for blocking and tackling across the business segments vs flashy announcements. BALANCE SHEET CLEAN-UP Earlier this month Winstar completed a round of high yield and bank financing which had the consequence of dramatically cleaning up Winstar's balance sheet as well as lowering their cost of debt, in addition to providing Winstar with $1 billion of new liquidity. Prior to this latest financing, Winstar had ten small tranches of various publicly traded debt securities that were very illiquid, causing their bonds to trade poorly. The blended cost of debt on these issues was roughly 13%. In addition, the covenants surrounding these various tranches were quite restrictive. For example, Winstar could do very little to expand in the Internet broadband service area, do very little with joint ventures, do very little internationally (except for what they managed to do so far on their own by begging and pleading with the covenant holders). Essentially, Winstar had to work around all of these covenants to do anything that would propel growth in areas such as international and data and broadband services. These ten small tranches with these restrictive covenants have now been replaced by four very large liquid notes that have none of these restrictive covenants and that we believe will trade far better in the market. Specifically, WCII will retire its existing senior and subordinated notes and will have the following notes outstanding: $325 million of 12.5% Senior Notes due 2008; $625 million of 12.75% Senior Notes due 2010; $450 million of 14.75% Senior Discount Notes due 2010; and 200 million (EURO) of 12.75% Senior Notes due 2010. Furthermore, as we stated, the blended cost of Winstar's debt after taking into account its Lucent debt and outstanding credit facilities has declined to 11.8% from 13%. In addition, WCII also recently received a $150 million increase in its previously announced committed bank facility bringing this bank facility to $1.150 billion. The existing $2 billion vendor financing agreement with Lucent was refinanced such that Lucent will make available $1 billion of loans at any one time. Thus, Winstar received a net $1 billion of new liquidity which obviously helps to continue to fund the expansion of the business plan. Winstar's added bank debt to the capital structure gives it access to large pools of capital with a lower cost of capital than the high yield markets. Thus, this lowering of cost of debt, in addition with Winstar's beta on its stock continuing to decline, has the impact of taking the discount rate that we use on Winstar down to roughly 14% from the previous 15% we were using. bobp