Level 3 Communications, Inc. announced
today that it has terminated its stockholder rights plan, commonly
referred to as a "poison pill." Level 3 Communications,
Inc. announced today that it has reached agreements to sell $880
million aggregate principal amount of 10% convertible senior notes due
Quite simply, the termination of the poison pill
simply takes away a takeover defense, and the move to increase its
capital base did anything but. Level 3 is a candidate for bankruptcy in
the years ahead, even though this offering has bought it some time. As
its business merely ‘stands still’ or even deteriorates modestly,
bankruptcy becomes an ever pressing issue.
However, Level 3’s shares climbed more than 20%
Tuesday given many believe it is prime takeover material because all
the low-hanging fruit of U.S. network infrastructure has already been
picked by acquirers. This takeover speculation is pure folly.
My reasons are quite simple: Outside of
takeover speculation, there is no bullish fundamental catalysts
whatsoever for a rising share price. None. Zero. Zilch. But there are a
collective host of negative catalysts that aren’t going away and will
in some cases accelerate.
To own this stock as an investment is pure insanity. [says Richard Rhodes of Realmoney.com]
That’s a pretty dour picture painted for Level3 then. The last line is pretty damning " To own this stock as an investment is pure insanity"…cripes.