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Alaska Communications Systems Group Inc. Message Board

  • dbehr25 dbehr25 Nov 2, 2012 12:24 PM Flag

    Could Dividend Cut be a Precursor to a Buyout??

    First off, I am not here to stir up speculation. I have no basis for the topic of this thread, but instead am just postulating.

    I was listening to the Earnings call on Nov. 1st and the Raymond James analyst made a great point. What has changed with their lender group that is different from last year? Meaning cutting the dividend entirely only ramps up debt repayment by 1.7%. First, is this small increase in accelerated debt repayment ($8 million) worth the tradeoff of having your stock sell off tremendously and hurting your current common shareholders. Second, was the company in the process of restructuring their debt facility? If so, one of the requirements by their bankers could have been to cut the dividend. Thoughts?

    Sentiment: Hold

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    • I think the executives and the unions cut a deal. The dividend cut was probably agreed to along with the new union contract. The executives keep their jobs and high salaries and the unions get continued high wages. The new hirees get the shaft with a lesser contract benefits and some work is contracted out. I do not have a copy of the contract but it seems to be less for new employees. Executive pay that is excessive does nothing for shareholder values with the small market cap. Pay is close to a million dollars plus any bonus for the top exe. A big cut in their pay would be helpful. However, a buyout would eliminate some exe's so maybe another $8,000,000. could be saved. Shareholders should revolt and demand lower pay to pay down debt and restore the dividend, or a sale of the company.

      Sentiment: Hold

      • 1 Reply to bottomfisher2012
      • It's really scarey how many total idiots run around this planet. What a stupid remark that shareholders should revolt and do this and do that. You might as well put a little beanie on your head, flap your arms and see if you could fly. You have a better chance of accomplishing that then you do of having ANYTHING come of your totally assinine statements.

        Sentiment: Strong Sell

    • No, the lenders just want their money back. They figure any dividends may decrease what they get back. ALSK was so overleveraged they caved in to the lenders and the union and General Communication took advantage of this weakness.

      • 1 Reply to salmonalsk
      • Just some points to consider.. take or leave..
        1) Verizon is struggling with their AK rollout - permitting processes for build out taking longer than they expected, weather/seasonality of construction complicating matters. They are behind their original schedule.
        2) Dividend cut - sucks if you were in ALSK for the div and bought at a high price. Great for new investors to buy up at cheap. Div cut helps pay down debt (every bit counts) and/or frees cash for much needed capital reinvestment plan in '13/14.
        2.1) look at the original dividend creation as having been a method to sell and pump stock for previous leadership to cash out. It was really short term thinking that actually only put a few shareholders first at cost to customer/employees, stockholders and company (look at price prior to and after div). Switches fell into disrepair, aged out, product lines were forgotten in favor of cutting operating expense and trumping up one myopic capital project (undersea fiber) and 'salvation' product line
        2.2) Does it tart up the company for a sale? It doesn't hurt. However, people said they were doing that when they created the div. Rumors of buyout of ALSK are as old as the hills and have persisted through multiple leadership regimes now. Who cares if they get bought out? Stock price will likely go up when that happens.
        2.3) Verizon wanted the wireless, not the wireline. With AWN created, ALSK is now only indirectly involved in wireless. If ALSK is bought it will probably be by the likes of a smaller regional rather than by Verizon (somebody that has experience and track record of gobbling up ILECs). Why would Verizon buy a wireline shop in AK? More probable is that Verizon will do either of the three: 1) continue with their own buildout; 2) buy GCI's wireless business; 3) buy into AWN consortium. Look at AWN as functioning like the TAPS alliance - a nonprofit transport company from which all oil companies benefit by pooling their resources to tackle transport in a very tough geography. ALSK is now attempting to position itself as the backhaul specialist, making AWN a customer, for as wireless b/w needs grow, so do backhaul needs. Say what you want about the wisdom of the strategy, but my guess is that's what they're thinking.
        Info given freely - worth what you paid for it.

        Sentiment: Buy

    • I agree - cutting the dividend really doesn't make much economic sense unless they are "tarting it up for a sale." (as the Brits say). . .Also Verizon has been VERY quiet lately in Alaska - are they having cold feet on their rollout or will they buy Alaska on the cheap?

    • I have a're an idiot.

      Sentiment: Strong Sell

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