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Technology Stocks : Gemstar Intl (GMST) -- Ignore unavailable to you. Want to Upgrade?

To: straight life who wrote (3583)	8/10/2000 11:53:54 PM
From: Jeff Bond	Read Replies (1) \| Respond to of 6516

DEBT IS A KILLER!!! In the pursuit of crossing the line first, NOTHING holds a financial race horse down more than debt. It is like a ton of brick stashed in the drawers of the jockey. What we have here is good ol fashioned DEBT in the form of bonds, and TV Guide must DUMP their debit if GMST wishes to look good on paper, and especially if GMST wishes to perform well at the financial race track. I had to do some digging, but I found my post of May 25, 2000 addressing this very issue, as a possible cause for delaying finalization of the merger, and definitely an issue for management to resolve. Message 13773942 from the post - Since we're postulating, I think its important to consider some details of the merger. From the merger agreement (as it pertains to TVGIA): "The agreements governing the Company's bank credit facilities and 8 1/8% senior subordinated notes due 2009 contain provisions which, absent modification or waiver of such provisions, will result in the Company being required to repay outstanding borrowings under the bank credit facilities and to repurchase the outstanding 8 1/8% senior subordinated notes, at the option of the holders, following closing of the transaction with Gemstar. The Company is currently assessing its options with respect to financing the repayment of any borrowings ultimately retired or seeking modifications to the agreements to allow the transaction to occur without resulting in the repayment or repurchase of the outstanding debt." GMST may have to cough up some CASH at the conclusion of the dance to pay off old TVGIA debt, I am SURE this is weighing HEAVY in deciding when to finalize the merger and announce earnings, based on the negeotiations that are, or already did, take place concerning the subordinated notes and credit facilities. This is BIG MONEY, and it might be premature to assume shenanigans or lack of disclosure, they may also be PREVENTED from saying anything until the deal is done. ------- I could smell this one coming a MILE away, and it has me thinking some cash is going to have to fly out the door to retire this debt. There goes the bottom line :o( We'll see how big money looks at this, perhaps they will like it, assuming they have a rosy picture of the way things are going to be in a year or two. If GMST retires the debt, then the company will be free in the future to use the money for R&D, or any other critical expense. They also might not like it, if it puts a cash pinch on the company. Debt is the BIG EVIL for a corporation, it truly ties their hands. I'm truly baffled on how this is going to play out, I'm sure we'll all have our answers soon enough. I wonder how this will show up in the financials? Regards, JB