Alcatel-Lucent (ALU) Equity Holders Still at Risk Despite Reports of Secured Loans - Goldman Sachs
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Price: $1.56 --0%
Rating Summary:
7 Buy, 8 Hold, 8 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 0 | Down: 0 | New: 6
Rating Summary:
7 Buy, 8 Hold, 8 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 0 | Down: 0 | New: 6
Trade ALU Now!
Shares of Alcatel-Lucent (NYSE: ALU) are on a tear Friday following reports the company is looking to bolster its balance sheet by securing loans from Goldman Sachs using company assets at collateral.
However, analysts at that same bank saying are saying re-fi options don't alter the company's fundamentally challenging outlook.
While secured loans strengthen Alcatel-Lucent's balance sheet, Goldman said the main liquidity focus remains on ALU's Jan 2015 Convert. They said a successful asset disposals and a secured loan could raise €800 mn at the mid point. This would alter the firm's 2014 liquidity analysis from a potential liquidity gap of –€330 mn to a scenarios suggesting €320 mn available gross liquidity by late 2014.
Nonetheless, while this would remove tail-risk from the company's ability to meet its 1 January 2015 convert, it does not alter Goldman view of the company equity story. "We estimate 3Q12 "available" gross liquidity of €2.55 bn vs. €2.2 bn in debt maturities to Jan 2015, which alongside continued cash-burn in 2013/14 suggests continued risks for equity holders.
Shares remain Conviction Sell List-rated at Goldman Sachs, with a EUR0.60 price target.
For an analyst ratings summary and ratings history on Alcatel-Lucent click here. For more ratings news on Alcatel-Lucent click here.
Shares of Alcatel-Lucent are up 15 percent to $1.15 on Friday.
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However, analysts at that same bank saying are saying re-fi options don't alter the company's fundamentally challenging outlook.
While secured loans strengthen Alcatel-Lucent's balance sheet, Goldman said the main liquidity focus remains on ALU's Jan 2015 Convert. They said a successful asset disposals and a secured loan could raise €800 mn at the mid point. This would alter the firm's 2014 liquidity analysis from a potential liquidity gap of –€330 mn to a scenarios suggesting €320 mn available gross liquidity by late 2014.
Nonetheless, while this would remove tail-risk from the company's ability to meet its 1 January 2015 convert, it does not alter Goldman view of the company equity story. "We estimate 3Q12 "available" gross liquidity of €2.55 bn vs. €2.2 bn in debt maturities to Jan 2015, which alongside continued cash-burn in 2013/14 suggests continued risks for equity holders.
Shares remain Conviction Sell List-rated at Goldman Sachs, with a EUR0.60 price target.
For an analyst ratings summary and ratings history on Alcatel-Lucent click here. For more ratings news on Alcatel-Lucent click here.
Shares of Alcatel-Lucent are up 15 percent to $1.15 on Friday.
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