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EarthLink Holdings Corp. Message Board

  • accugrowth accugrowth Aug 18, 2013 9:49 AM Flag

    ELNK Bond Registration SEC Docs

    On Friday, ELNK released the SEC docs for their $300 M bond registration. There were no surprises. Bond holders will be able to trade, in the open market, their ELNK bond holdings.

    This offer may be part of a move to open ELNK to a merger with one of the other Cloud competitors. Or, it may be a move to help management take ELNK private (see Dell or Dole).

    The investment to build the new Cloud IT services is mostly done. The losses ELNK has reported during the first 6 months of 2013 are mostly paper losses listed under 'GoodWill'. The Depreciation line item also tends high during the first couple of years after a new build out, but then decreases with time. During the last CC management reported that they do not see a lot of new spend in 2014 as they need to fill the existing Data Centers first. This portends positive Earnings results in the near future.

    ELNK has the Cash Flow to support the current almost 4% dividend yield. Your other choice is to buy into the 7 1/2% ELNK bond yield, but with no potential for capital appreciation. It is an easy choice for me.

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