Broadwing currently has $100 million in the bank, a $75 million line of credit and has just announced that it "plans to raise" another $125 million. They haven't done it. They just "plan" to do so they say. For what its worth, there were no details attached to this announcement either, so the only thing that you can read into this is that they have opened up the offering for bidding by institutions who may want more of what Broadwing has to offer its good investors. Since nothing is finalized, our feeling is that if Broadwing doesn't get the terms that they want, the offering could be cancelled. It is quite possible that the current shares could get bid up like we have seen in other recent offerings with TWTC and GLBC. Maybe this is their way of shaking out the small investors for all we know at this point before the shares move higher? What could they be up to? Dr. Huber the former CEO says that their fiber optic lines would cost over $5.5 billion to replace and those lines are currently valued at only $1 billion.
Also, keep in mind that the annual shareholder meeting is this Friday, May 12, 2006. They would be crazy not to announce something poistive by Thursday. Lastly, lets not forget that CIBC World Markets just gave the stock a BUY rating about a week ago with a target of $18.00. Are they underwriting the offering? We shall have to see what they have up their sleeves!
A funny coincidence, Netflix - NFLX also just announced that they were raising $100 million too and their stock (like BWNG) has trippled over the last year. They don't need the money either?
We will have to be patient and eventually investors will need to make some serious decisions, but not until the company tells its story on May 12 at the annual shareholders meeting.
We would expect an acquisition announcement soon to explain the use of their funds so that the company can further increase their EBITDA position.
