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  • larry62308 larry62308 Jan 23, 2012 10:58 AM Flag

    Adding to position

    Got my order in...but volume is slow...

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    • FiberTower falls apart at the seams
      November 16, 2011 - What appears to be a perfect storm of distressing news has put FiberTower's stock into a tailspin today, plummeting the backhaul provider's noontime trades to a 60% loss.

      Whereas missed earnings can cause a considerable drop, FiberTower announced some serious problems in addition to a wholesale bailout of directors as well as its Chairman of the Board, John Kelly.

      Kelly, the former President and CEO of Crown Castle International, joined Phil Kelley, Crown Castle's Senior Vice President and Randall Hack, President and Chief Executive Officer of Capstone Capital L.L.C. in announcing their resignation from FiberTower's board of directors earlier this week.

      In a statement today, the mobile services backhaul provider said it has missed an interest payment on its convertible senior notes due 2012. The company has 30 days to find a way to restructure its debt before it's declared officially in default.

      FiberTower, a component of Wireless Estimator's Sector Watch, also said it has missed a Nasdaq deadline to file its Q3 report as it is still working on finalizing the amount of impairment charges it needs to take. As a result of continued customer early service terminations experienced in the quarter, its decision to limit investment in its legacy network, and expected future cash flows lower than its network's carrying value.

      The company said that it has reduced its workforce approximately 40%, and has halted all capital and project related spending in an effort to conserve existing liquidity.

      FiberTower also said it plans to write down the value of its network equipment and construction in progress. The total charges are expected to be in the range of $150-$170 million for the third quarter.

      It also plans to impair its FCC licenses by $158-$170 million, reducing their value to $87- $129 million.

      Adding to FiberTower's problems, yesterday the company said that it received a letter from the Nasdaq Stock Market stating that it no longer complies with the rules required for continued listing on Nasdaq.

      The company has 60 days during which to submit a plan to regain compliance.

      Two months ago, FiberTower saw a 15 percent increase in one day after Ted Weschler, who has been newly appointed to oversee a piece of Berkshire Hathaway’s investment portfolio, said he has interests in the company.

      The newest member of Warren Buffet's investment arm was previously acting as a managing partner at Peninsula Capital Advisors where he had accumulated 7 million shares of FiberTower.

      Hack and John Kelly are advisory directors for Berkshire Partners, a Boston-based private equity firm not affiliated with Warren Buffet's Berkshire Hathaway.

      Berkshire owns Tower Development Corporation, a group that pursues new tower builds and acquisitions in close partnership with Crown Castle.

      Berkshire assisted Crown Castle in its transition to public ownership through its 1998 IPO and subsequent sales of equity securities.

      An early investor in FiberTower, Crown Castle was stung by the company's poor performance and reported that it had reduced the value of its FiberTower investment by taking a $75.6 million write-down during Q4 2007.

      American Tower Corporation also invested in FibreTower, providing about 13% of the company's seed money.