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Strategies & Market Trends : 2002 Canadian Stock-Picking Challenge -- Ignore unavailable to you. Want to Upgrade?

To: vds4 who wrote (940)	5/23/2002 8:56:38 AM
From: Al Collard	Respond to of 1590

NT-t...in the news: NP says Nortel tangible net worth shrinking fast Thu 23 May 2002 The National Post reports in its Thursday edition that CreditSight says Nortel Networks is in a tough spot. The Post's Mark Evans writes that while Nortel needs to raise money to avoid violating its banking covenants, it could have a difficult time doing an equity-linked offering, given its sagging stock price. CreditSights expects Nortel will likely be squeezed by its banking syndicate if it continues to edge closer to breaking bank covenants linked to its tangible net worth. "Nortel has been eating into its tangible net worth cushion at a startling rate," says CreditSights. "The need to lay in more equity to build that cushion is even more compelling than its need to build balance sheet liquidity, since the bank-linked backstop could be further reduced if they hit a technical default." Nortel must have a tangible net worth of $1.88-billion (U.S.) to avoid breaching its bank covenants. Its tangible net worth was $3.9-billion (U.S.) at the end of the second quarter. However, this figure could decline if Nortel has to take write-offs as part of further restructuring. CreditSights says Nortel's ability to raise capital is crucial if its wants to keep the banks at bay.