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Non-Tech : Secret Squirrels hit! -- Ignore unavailable to you. Want to Upgrade?

To: Wayne Rumball who wrote (7867)	1/24/2002 12:21:33 PM
From: ChrisJP	Respond to of 12872

Thanks Wayne -- I'm looking at it .... obviously I missed the 1.70s opportunity. I'm still trying to figure it out. The most unusual part is how this stock dove on so few shares. Chris

To: Wayne Rumball who wrote (7867)	1/24/2002 12:33:51 PM
From: cavan	Respond to of 12872

Energis shares plummet on warning Telecoms group says it may breach banking covenants By Friedel Rother, FT Investor Last Update: 11:58 AM ET Jan. 24, 2002 LONDON (FT Investor) - Energis shares halved in value on Thursday after the UK telecoms group warned on sales and said it was at risk of breaching banking covenants. The announcement sent Energis (UK:EGS: news, chart, profile) shares down as much as 58 per cent to 22p in afternoon trade. It closed at 26p. Rival Colt Telecom (UK:CTM: news, chart, profile) was also down 7.6 per cent at 94.75p in London on the news and National Grid Group (UK:NGG: news, chart, profile), which owns 33 per cent of Energis, fell 0.8 per cent to 451p. Energis said turnover for the year was now expected to come in 5 per cent below current consensus expectations of £1.01bn and earnings before interest, tax, depreciation and amortisation were likely to be 10 per cent lower than consensus forecasts of £155m. It made the reductions after seeing extra pressures on its balance sheet towards the end of last year. "December's operating and financial information showed lower than expected growth in revenue and increased pressure on margins," it said. Energis called its recent performance "disappointing" and said it was a result of fewer orders actually being converted into billed revenue as well as an overall decline in order flow. Energis also said it was in danger of breaching its financial covenants and would be discussing the implications of its new expectations with its banks. Too low Mikkel Hofstee, an analyst at ABN Amro, said he thought the shares had fallen too far, but said there were some serious issues to sort out. "If the share price is this low compared to the value of the company it's definitely an overreaction but the issue of the bank facility needs to be resolved first," he said. "Energis's cash balances are almost nil. They clearly rely on the bank to fund expansion." Over the past year, the share prices of many alternative carriers have slumped on funding concerns across the sector, which has already seen the collapse of Atlantic Telecom (UK:ATN: news, chart, profile). However, funding fears at Energis seemed to be less of a worry after its interim results in November. At that time, the company said it was raising additional debt capital and extending the maturity of its banking facilities. See more on Energis interim results Cutting, cutting, cutting Energis also said in November that it would cut £20m from its cost base. The company now says it is "rigorously controlling all expenditures" and plans to slash expenses even further. "We are confident we can take a further £30m a year out of our cost base during 2002/03. Restructuring costs will be approximately £10m," Energis said. Those cuts follow more than £20m in cost reductions announced during the group's interim results last November, as part of a restructure. The alternative telecoms carrier also said it would lower capital expenditure for the current year by more than £40m to £300m. For the year ending in 2003, Energis said it did not expect capex to exceed £200m. Mr Hofstee said the cuts were a start to resolving the company's financial woes. However, he said Energis would also have to focus on improving sales, while noting that customers seemed to be spending more and more time considering their purchases. Downgraded The warning from Energis comes after the stock was downgraded earlier in the day to "market underperform" from "market perform" by Lehman Brothers. "A smaller bank facility and continued sluggish growth create the potential need for new equity," wrote analysts Rufus Grantham and Nick Delfas. "Although we believe Energis' business model will be successful in the long term there is risk of dilution," they added. Lehman also cut its Energis price target to 82p from 131p. Friedel Rother is a reporter cbs.marketwatch.com