Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Allegiance Telecom (ALGX) -- Ignore unavailable to you. Want to Upgrade?

To: VBroady who wrote (129)	2/7/2003 3:38:40 AM
From: Dale Baker	Read Replies (1) \| Respond to of 145

Let me give you the simple picture: ALGX has $300m cash, $200m receivables, $1 billion network assets and $1.2 billion debt. Other liabilities make tangible book value $140 million or just over a buck. A big chunk of debt is held by banks who want action by April. ALGX cannot pay the banks without using all their cash and selling parts of their network (which amounts to BK). If ALGX goes BK the common shareholders get little or nothing while the banks and bondholders divide the remaining assets. Most likely ALGX reorganizes in BK and the banks and bondholders get equity in a new company with little or no debt. You can lose everything in the stock at .42. Buy the bonds for .22 on the dollar and you get a guaranteed chunk of ALGX assets. A debt-free ALGX could do OK, fwiw. To compare TWTC, they have $300m cash, $100m receivables and $1.7 billion network assets with only $1 billion debt. Only 20% of the debt is held by banks in short-term notes. The rest isn't due until 2008 in bonds. You can see why TWTC is trading over $2 while ALGX collapses.