Able Telcom Holding Corp. (Symbol: ABTE) (Price: $10.4375) failed to file its Form 10-K for fiscal year ended October 31, 1998 as required no later than Friday, January 29, 1999. Able is in its second quarter of its fiscal 1999 year, yet it still has not filed its 1998 statement. In fact, Able has not filed an audited statement since July 1998, when it became responsible for MFS NT’s over $3 million monthly losses.
Last Friday, Billy Ray announced that Able was “finalizing earnings” for last year. This is a telling comment. Past experience has shown that Able’s reported earnings have never been final. Able avoids booking expenses by capitalizing costs, claiming they are recoverable under uncompleted contracts and disputing subcontractor bills. It also collects payments before it completes its work, and takes a portion of these collections as income. But it does not disclose the uncompleted contract’s terms. The net result is that on a cumulative basis, in its entire 10-year history, Able’s write-offs have exceeded the earnings reported to stockholders. Unfortunately, this time Able incurred real debts that require cash payments, not just hopeful stockholders.
Able announced that Interfiducia Partners LLC had agreed, subject to undisclosed conditions, to purchase its defaulted Senior Notes and Preferred from their holders. This entire “white knight” episode is a farce. Interfiducia is a month-old shell company. Neither it, nor Robert H. Young and Gerald Pye, have any demonstrable ability to obtain the required funds. In its SEC filings, Able has acknowledged it has insufficient assets and cash flow to repay or refinance its debt. It is entirely absurd to claim that any investor would buy Able’s troubled debt and then agree to change its terms to accommodate Able’s stockholders more than to itself.
Asensio & Company, Inc. has disclosed and openly discussed its short interest, analysis and negative opinions of Able and its management. Able’s claim that Asensio & Company’s negative opinion relies on its preferred is completely false. Able’s latest problems come from its leveraged, overpayment for MFS NT, a money-losing, cash starved bundle of poorly negotiated construction contracts that no other company, in or out of the industry, wanted. Not from the terms of its preferred.
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