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usf, easily could be (given the obvious), but might be something real in the background, too. As with shell plays that make nice runs after a reverse merger--once a "real company" takes over the shell--if you get in early on the right one, there's tremendous potential.
This one got notice of NASDAQ delisting back in June, yet is still an .ob...worth checking out. Not saying buy...am waiting on a slow .pdf download right now.
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This is a warrant not a common share stock for the stock MCLD. There is no float to it, all o/s which is low. Of course its a group play. But its not moving for the group like they wish. Now the boards can play and maybe move it or the group will get stuck. MM's have been holding it back and there has to be more pressure to move it. So now its whether or not they can get more players.
-------------------- Invest with your brain not with your heart.
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buytex whats the w on the end stand for and why did it go so high with low volume ? is it a low floater? are what 300% with no volume jim cramer said low floaters a good is this true
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Looks like they're doing well enough to hold major lender(s) at bay with mixed operational stats, according to PR released a couple of days ago...if the warrant info is mentioned, however, I'm overlooking it...still don't get the play.
quote:McLeodUSA Reports Second Quarter 2005 Results • Continued strong operational performance and cash management • Recorded non-cash charge of $202MM related to asset impairment review • Company focused on capital restructuring with no recovery expected for preferred or common stockholders CEDAR RAPIDS, Iowa – August 9, 2005 – McLeodUSA Incorporated, one of the nation’s largest independent, competitive telecommunications services providers, today reported financial and operating results for the quarter ended June 30, 2005. Total revenues for the quarter ended June 30, 2005 were $159.7 million compared to $160.5 million in the first quarter of 2005 and $191.9 million in the second quarter of 2004. In the second quarter of 2005, long distance and local revenue per customer increased slightly due to higher wholesale volume and private line and data revenue per customer increased by 1.2%, however, these increases were offset by a reduction in total customers for the quarter. Gross margin for the second quarter of 2005 was $67.5 million compared to $67.2 million in the first quarter of 2005 and $86.6 million in the second quarter of 2004. Gross margin as a percentage of revenue for the second quarter was 42.3%, compared with 41.9% in the first quarter of 2005 and 45.1% in the second quarter of 2004. Gross margin in the second quarter of 2004 included various favorable settlements of approximately $6 million. SG&A expenses for the second quarter of 2005 were $53.7 million compared to $56.7 million in the first quarter of 2005 and $68.5 million in the second quarter of 2004 as the Company continues to realize the benefits of its ongoing process improvement programs and other actions taken to reduce nonessential expenses. Adjusted EBITDA in the second quarter of 2005 was $13.8 million. This amount included an unfavorable impact of approximately $4.0 million related to various settlements, which were partially offset by higher access billings in the second quarter. The $13.8 million Adjusted EBITDA in the second quarter compared to $10.5 million in the first quarter of 2005 and $18.1 million in the second quarter of 2004. In the second quarter, the Company incurred $4.8 million in restructuring charges related to financial and legal advisors supporting the Company’s pursuit of strategic alternatives or capital restructuring. Consistent with the Company’s current focus on a capital restructuring and in accordance with certain accounting standards and prescribed procedures, the Company performed analyses related to the deemed recoverability of its property and equipment and carrying value of selected intangible assets. As a result, a non-cash impairment charge of $202.5 million was recorded in the second quarter. Net loss for the second quarter of 2005, including the impairment charge, was $(268.0) million, or a loss per common share of $(0.86), versus $(97.5) million in the first quarter of 2005 and $(82.2) million in the second quarter of 2004. The Company’s excellent operational performance continued in the second quarter of 2005. The customer satisfaction rating for the quarter was 95%, billing accuracy remained at 99.9% and the Company continued to consistently achieve 99.999% network reliability, all in line with Company goals. Customer platform mix at the end of the second quarter was 74% UNE-L, 4% resale and 22% UNE-P versus 69%, 4% and 27%, respectively, at the end of the second quarter of 2004. Business customer line turnover was 2.2% in the second quarter of 2005 compared to 2.0% in the first quarter of 2005 and 2.2% in the second quarter of 2004. Total customer line turnover in the second quarter was 2.3% versus 2.1% in the first quarter of 2005 and 2.5% in the second quarter of 2004. The Company ended the quarter with $33.4 million of cash on hand. Total capital expenditures for the second quarter of 2005 were $9.1 million principally in support of the Company’s VoIP Dynamic Integrated Access rollout and sustaining the existing voice and data networks. The Company was in full compliance with the terms of the forbearance agreement with its lenders in the second quarter of 2005. Capital Restructuring As recently announced, the Company and its lenders agreed to extend until September 9, 2005 the forbearance agreement initially entered into on March 16, 2005 and previously extended to July 21, 2005. Under the terms of the forbearance agreement, the lenders continue to agree not to take any action as a result of non-payment by the Company of certain principal and interest payments due on or before September 9, 2005 or any related events of default that occur through September 9, 2005. As previously announced, the Company is working with its lenders to effectuate a capital restructuring where the lenders would convert a substantial portion of their debt to equity and become the Company’s stockholders. None of the restructuring alternatives under evaluation provide any recovery for the Company’s current preferred or common stockholders. Therefore, the Company does not expect holders of its preferred or common stock to receive any recovery in a capital restructuring. In addition, there can be no assurance that the Company will be able to reach an agreement with its lenders regarding a capital restructuring on terms and conditions acceptable to the Company prior to the end of the forbearance period on September 9, 2005. The Company continues to believe that by not making principal and interest payments on the credit facilities, cash on hand together with cash flows from operations are sufficient to maintain operations in the ordinary course without disruption of services or negative impact on its customers or suppliers. McLeodUSA remains committed to continuing to provide the highest level of service to its customers and to maintaining its strong supplier relationships. About McLeodUSA McLeodUSA provides integrated communications services, including local services, in 25 Midwest, Southwest, Northwest and Rocky Mountain states. The Company is a facilities-based telecommunications provider with, as of June 30, 2005, 38 ATM switches, 38 voice switches, 698 collocations, 432 DSLAMs and approximately 2,072 employees. Visit the Company’s Web site at " target="_blank">www.mcleodusa.com[/quote]
-------------------- Nashoba Holba Chepulechi Adventures in microcapitalism...
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quote:Originally posted by Ric: This is a warrant not a common share stock for the stock MCLD. There is no float to it, all o/s which is low. Of course its a group play. But its not moving for the group like they wish. Now the boards can play and maybe move it or the group will get stuck. MM's have been holding it back and there has to be more pressure to move it. So now its whether or not they can get more players.
Roger that, lol--I see who's playing...
Still interested in owner/terms of warrant--got any ideas for tracking it down?
[ August 12, 2005, 13:27: Message edited by: BuyTex ]
-------------------- Nashoba Holba Chepulechi Adventures in microcapitalism...
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So far, I found that the warrants are from the reorganization from bankruptcy in 2002. Its worth 22.6 million dollars in assests that can be converted to common shares.
-------------------- Invest with your brain not with your heart.
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You can look at bottom of page to see warrant value as assigned by company. You can look at every 10 Q after that and the same value was carried over for the warrant.
Now if you want details. Heres the Def 14C for the reorganization. I am sure its in here somewhere. I went through quickly and didn't see anything but what they called phamtom shares which I assume is this warrant but didn't look real hard.
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In exchange for the cancellation of the Notes and the unpaid interest thereon, the bondholders received their pro rata share of (1) $670 million in cash, (2) 10,000,000 shares of Series A Preferred Stock, which is convertible into 15% of Class A Common Stock on a fully diluted basis as of the effective date of the Plan after giving effect to the Plan and conversion of the Class B Common Stock and Class C Common Stock (but prior to the exercise of the warrants) and (3) new 5-year warrants to purchase 22,159,091 shares of Reorganized McLeodUSA Class A Common Stock for $30 million;
[q]The warrants (the "Warrants") are a new class of securities. Each Warrant entitles the holder thereof to purchase from McLeodUSA one share of Class A Common Stock, subject to adjustment, at an initial exercise price per share equal to $1.3538462, subject to adjustment. The Warrants expire on April 16, 2007.[/q]
Still don't see the play--2007 is a long way off & looks like Forstman in the driver's seat---will take phone calls for me to understand. And like you say, may just be a group grope...
looking for an eod play now...but thanks, Ric--you got skills...
-------------------- Nashoba Holba Chepulechi Adventures in microcapitalism...
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What does this mean? a $1.35 per share. So if I own one share on april 2007 they will pay me $1.35??
Confused.
[q]The warrants (the "Warrants") are a new class of securities. Each Warrant entitles the holder thereof to purchase from McLeodUSA one share of Class A Common Stock, subject to adjustment, at an initial exercise price per share equal to $1.3538462, subject to adjustment. The Warrants expire on April 16, 2007.[/q]
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Anybody know where I can find charts on this one, its so new that stockcharts.com wont even bring it up, and etrade shows a blank screen, thanks
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renrob, do you understand how these W plays work? I mean, obviously, buy low, sell high...but what *if* somebody held--for whatever reason--I'm not sure what it is exactly we're buying...
-------------------- Nashoba Holba Chepulechi Adventures in microcapitalism...
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What Are Warrants? By Reem Heakal Contact Reem February 17, 2004
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A warrant, like an option, gives the holder the right but not the obligation to buy an underlying security at a certain price, quantity and future time. However, unlike an option, an instrument of the stock exchange, a warrant is issued by a company. The security represented in the warrant (usually share equity) is delivered by the issuing company instead of an investor holding the shares.
Companies will often include warrants as part of a new-issue offering to entice investors into buying the new security. A warrant can also increase a shareholder's confidence in a stock, if the underlying value of the security actually does increase overtime.
There are two different types of warrants: a call warrant and a put warrant. A call warrant represents a specific number of shares that can be purchased from the issuer at a specific price, on or before a certain date. A put warrant represents a certain amount of equity that can be sold back to the issuer at a specified price, on or before a stated date.
Characteristics of a Warrant Warrant certificates have stated particulars regarding the investment tool they represent. All warrants have a specified expiry date, the last day the rights of a warrant can be executed. Warrants are classified by their exercise style: an American warrant, for instance, can be exercised anytime before or on the stated expiry date, and a European warrant, on the other hand, can be carried out only on the day of expiration.
The underlying instrument the warrant represents is also stated on warrant certificates. A warrant typically corresponds to a specific number of shares, but it can also represent a commodity, index or a currency.
The exercise or strike price is the amount that must be paid in order to either buy the call warrant or sell the put warrant. The payment of the strike price results in a transfer of the specified amount of the underlying instrument.
The conversion ratio is the number of warrants needed in order to buy (or sell) one investment tool. Therefore, if the conversion ratio to buy stock XYZ is 3:1, this means that the holder needs three warrants in order to purchase one share. Usually, if the conversion ratio is high, the price of the share will be low, and vice versa. (In the case of an index warrant, an index multiplier would be stated instead. This figure would be used to determine the amount payable to the holder upon the exercise date.)
Investing In Warrants Warrants are transferable, quoted certificates, and they tend to be more attractive for medium-term to long-term investment schemes. Tending to be high risk, high return investment tools that remain largely unexploited in investment strategies, warrants are also an attractive option for speculators and hedgers. Transparency is high and warrants offer a viable option for private investors as well. This is because the cost of a warrant is commonly low, and the initial investment needed to command a large amount of equity is actually quite small.
Advantages Let us look at an example that illustrates one of the potential benefits of warrants. Say that XYZ shares are currently priced on the market for $1.50 per share. In order to purchase 1,000 shares, an investor would need $1,500. However, if the investor opted to buy a warrant (representing one share) that was going for $0.50 per warrant, with the same $1,500, he or she would be in possession of 3,000 shares instead!
Because the prices of warrants are low, the leverage and gearing they offer is high. This means that there is a potential for larger capital gains and losses. While it is common for both a share price and a warrant price to move in parallel (in absolute terms) the percentage gain (or loss), will be significantly varied because of the initial difference in price. Warrants generally exaggerate share price movements in terms of percentage change.
Let us look at another example to illustrate these points. Say that share XYZ gains $0.30 per share from $1.50, to close at $1.80. The percentage gain would be 20%. However, with a $0.30 gain in the warrant, from $0.50 to $0.80, the percentage gain would be 60%.
In this example, the gearing factor is calculated by dividing the original share price by the original warrant price: $1.50 / $0.50 = 3. The '3' is the gearing factor, and the higher the number, the larger the potential for capital gains (or losses).
Warrants can offer significant gains to an investor during a bull market. They can also offer some protection to an investor during a bear market. This is because as the price of an underlying share begins to drop, the warrant may not realize as much loss because the price, in relation to the actual share, is already low.
Disadvantages Like any other type of investment, warrants also have their drawbacks and risks. As mentioned above, the leverage and gearing warrants offer can be high. But these can also work to the disadvantage of the investor. If we reverse the outcome of the example from above and realize a drop in absolute price by $0.30, the percentage loss for the share price would be 20%, while the loss on the warrant would be 60%!
Another disadvantage and risk to the warrant investor is that the value of the certificate can drop to zero. If that were to happen before it is exercised, the warrant would lose any redemption value.
Finally, a holder of a warrant does not have any voting, shareholding or dividend rights. The investor can therefore have no say in the functioning of the company, even though he or she is affected by any decisions made.
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A Bittersweet Stock Jump One notable instance in which warrants made a big difference to the company and investors took place in the early 1980s when the Chrysler Corporation received governmentally guaranteed loans totaling approximately $1.2 billion. Chrysler used warrants, 14.4 million of them, to “sweeten” the deal for the government and solidify the loans.
Because these loans would keep the auto giant from bankruptcy, management showed little hesitation issuing what they thought was a purely superficial bonus that would never be cashed in. At the time of issuance Chrysler stock was hovering around $5, so issuing warrants with an exercise price of $13 did not seem like a bad idea. However, the warrants ended up costing Chrysler approximately $311 million, as their stock shot up to nearly $30. For the federal government, this “cherry on top” turned quite profitable, but for Chrysler it was an expensive after thought.
Conclusion Warrants can offer a smart addition to an investor's portfolio, but due to their risky nature, warrant investors need to be attentive to market movements. This largely unused investment alternative, however, can offer the small investor the opportunity for diversity without having to compete with large, market-influencing institutions.
posted
well, according to their latest 10q the company expects the common stock to be worthless in any restructuring. If thats the case i fail to see how the warrants are worth anything. if 1.35 is the excercise price how can these be worth a thing? am i missing something here?
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