Thursday, December 21, 2006


The WSJ reports that hedge fund Highland Capital, that is the 2nd-largest shareholder in Delphi, plans to send a letter today to Delphi's board outlining a $4.7bn capitalization plan for Delphi, which is under Ch11. That would counter a proposal from a group of investors led by Appaloosa Mgmt and Cerberus Capital Mgmt that would infuse up to $3.4bn in preferred and common equity into the co.

According to the WSJ, Raytheon (RTN) last night was in the final stages of completing a deal to sell its aircraft-manufacturing unit to Canadian buyout firm Onex and Goldman Sachs Capital Partners for $3.3bn.

“Heard on the Street” column discusses Level 3 (LVLT), whose stock is up almost double in the past year and bond prices have risen about 20%. Behind the gains: Explosive growth in video viewing over the Internet, which requires high-speed networks of the sort Level 3 offers. At the same time, a hearty appetite by investors for risky debt has enabled the co to put itself on firmer footing by refinancing its debt at lower rates. There also are good reasons to believe that Level 3 might be an acquisition candidate. But there are reasons to be wary: The co remains saddled with debt, it is in a business that still has excess capacity, and it has reported a quarterly profit just once in its more than 20y history. With the stock and bonds at lofty levels, it could be that any future possible good news already is priced in. Even bullish analysts acknowledge that to keep the stock climbing, demand for video and voice over the Internet will have to be strong enough to allow Level 3 to increase what it charges for access to its fiber network. Level 3 also will have to demonstrate that it can skillfully integrate a series of recent acquisitions. The co will also have to show that it is getting closer to pulling more cash out of its business than it is putting in.

Barron’s Online “Inside Scoop” section reports that between Oct. 2 and Dec. 7, 8 insiders at Thermo Fisher (TMO) reaped over $103m in proceeds by selling 2.3m shares. Two million of those shares were bought with the exercise of options.

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