Good call. The closing was very interesting today. I don't know if it was a technical rally or was due to MCHX filing their proxy statement which shows discipline for the first time in a long time on compensation. Maybe it really is a new start for the company with the new management team.
While I agree that it is highly likely the current equity gets substantially diluted, MCP does have a few bargaining chips. Paradoxically, MCP has the most leverage when it is the weakest because the threat is for management to walk away from the company. There is no way a banker wants to run MCP. They know they would completely destroy whatever value was left. Given that management and the board own a big chunk of the equity, they will fight to preserve some value for it. Especially if they are willing to kick in some more money to make everything work, they will be able to preserve 10% to maybe 20% of the new equity for the current shareholders. It also depends on REE pricing over the next few months. If they can get some pricing increases, they will have more leverage.
I think the covenant discussion of the two quarters above 4000mt and $20m EBITDA giving more borrowing capacity is a red herring. They cant wait that long (i.e., mid May next year when they report Q1 2016 results to see if they made it). They have to fix this in the next 3 to 6 months.
AMZN should buy CALL, they have a phone no one wants and they could create a disruptive product
Charlie Ergen at DISH should buy them for the same reason. He loves low cost disruptive products.
Comcast should go this route also. They already have a ton of wifi spots.
How about GOOG?
My point is that there are a lot of alternatives to a very low cost alternative. Tilson Highlighted this in his piece a year ago. One or more companies will go down this road and as wifi continues to proliferate it will have its place in the market.
WSJ article today, which cites IPAS global wifi network, points to possible disruption to T and VZ of a wireless phone company based on wifi at very low cost. Putting Call and IPAS together could create a global alternative to the cellular providers.