From Porqupoi5's newspapercutting s/h--14.55c From the SMH...

From Porqupoi5's newspapercutting s/h--14.55c From the SMH today-Deloittes see it as a way of improving the capital raising prospects-as I read the article-conversion at 14.5 cents per share.
Williams moves to take over PowerTel
By Brian Robins
May 15 2002


Troubled US telecommunications company Williams Communications is moving to take control of PowerTel, by seeking to convert a $16 million loan into equity.

Williams has a 35 per cent stake in PowerTel which will rise to 45 per cent if shareholders approve the conversion.

Assuming the full conversion of preference shares, Williams's stake in PowerTel would rise to 51 per cent.

Williams collapsed earlier this year, subsequently reaching agreement with creditors to cut its borrowings by $US6 billion.

The other large shareholder in PowerTel is Downtown Utilities, a joint venture of EnergyAustralia, Energex and Citipower.


Its existing 35 per cent stake in PowerTel - which matches the Williams stake - would be watered down to 30 per cent if the loan is converted.

After breaching revenue covenants, PowerTel needed to raise additional funds earlier this year. PowerTel subsequently revised its business plans and renegotiated its senior debt facility.

At that time, Williams lent PowerTel $16 million to boost working capital and meet PowerTel's obligations under some banking facilities.

In its annual report released late last month, PowerTel's auditors said there was ''inherent uncertainty" as to whether the revised business plan was achievable, and whether undrawn amounts under the finance facility with its banking syndicate would be accessible.

''Given PowerTel's current level of debt funding, its recent financial performance and the outlook for participants in the telecommunications sector, it is possible PowerTel may need to seek additional funding in the future," Deloitte Touche Tohmatsu said in a review of the planned loan conversion.

''Granting approval of the conversion rights will improve the ability of Williams Communications, as the major shareholder, to facilitate the process of future fundraising from alternative sources."

The conversion price is 14.55c a share, the weighted average of PowerTel's share price in February.

PowerTel shares closed at 7.1c yesterday.