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To: Gary M. Reed who wrote (39560)	11/21/2000 9:13:00 AM
From: LLCF	Respond to of 436258

<Of course, the stuff these guys pulled off was merely childs play, so maybe Easy Al is right.> Also, that IS financial innovation! Getting risky assets turned into non-risky ones is quite an innovation! Also, who cares about 'financial innovation', why does he give a crap about that? Hope that's not a new indicator for the Fed! DAK

To: Gary M. Reed who wrote (39560)	11/22/2000 12:27:59 AM
From: Ken98	Respond to of 436258

Gary, I still think this will, in retrospect, be seen as one of the seminal events in the bursting of the Easy Al's Marvelous Financial Innovation Machine: <<NEW YORK (Reuters) - ICG Communications Inc. (NasdaqNM:ICGX - news), a telecommunications upstart that had been a darling of industry tycoons, filed for Chapter 11 bankruptcy on Tuesday, facing a mountain of debt and operational woes. [...] Analysts said the filing was expected because of ICG's $2.4 billion in debt and plummeting profits. Wall Street also is turning its back on ICG and other startup phone companies that fail to deliver on promises of rapid growth. ``We'll probably see additional Chapter 11 filings by companies that have less-attractive business plans, sub-par management teams and that are over-leveraged,'' said Trent Spiridellis, a Banc of America analyst. [...] ICG filed its bankruptcy petition with the U.S. Bankruptcy Court in Delaware. The company listed assets of $2.79 billion and debts of $2.81 billion as of Sept 30. [...] ICG's shares were halted on the Nasdaq market ahead of the announcement. The last price was just 5/16, or about 99 percent off the stock's record high of $39-1/4 in March. ICG's $2.4 billion in high-yield, or ``junk,'' bonds were trading between 11 and 14 cents on the dollar, bond traders said. The company said it had secured $350 million in new financing from Chase Manhattan Bank and that $200 million was available immediately. The other $150 million will be available when conditions are met. ICG has about $160 million in cash on hand. Affiliates of Liberty Media Group (NYSE:LMGa - news), AT&T Corp.'s (NYSE:T - news) cable programming arm headed by media billionaire John Malone, bought a $500 million stake in ICG early this year. Hicks, Muse, Tate & Furst, a private investment firm, also invested $230 million. Hicks, Muse and Liberty forced out Chairman and Chief Executive Shelby Bryan in August after the company first warned of its poor outlook for 2000 and 2001 earnings before interest, taxes, depreciation and amortization. Bryan's replacement, a Liberty Media executive, resigned after only four weeks in the job. A board member from Liberty Media and another from Hicks, Muse also quit. [...]>> Complete article at: dailynews.yahoo.com Just think, Hicks and Malone just smoked $730 million bucks. And the only ones that will ever see a dime (and that's about all they will see on each $) are the senior secured creditors. How would you like to be setting on a big fat equity investment in one of the gadzillion CLECs whose sole reason for existence was to go public and get bought out by WCOM? How about the switch makers that gave them vendor financing? There are lots of office building owners with ICGX equipment in their telco closets asking, "what's next"? One of my favorite risk shifting strategies involves the wireless carriers that transfer all of their cell sites to a tower company. Each cell site costs around $250-500k (net of electronics) and each carrier has hundreds and hundreds of them. These tower companies have even more tortured balance sheets than the wireless carriers. But this way, the carrier does not have to carry any debt associated with the cell site buildout and the tower company gets to use the credit of the carrier (via the lease) to get debt financing to buy the cell site from the carrier. It's beautiful - the carrier's good (?) credit supports the debt but it does not show up on the carrier's balance sheet.