Able Telcom Holding Corp. (Symbol: ABTE) (Price: $10.25) has been seeking a financing since April 1998. None has materialized. As a result, the company has defaulted on its debt. These defaults must be cured. There are reports that the holders of Able’s Convertible Preferred will sell their position to a foreign financial institution. The new investor is alleged to have access to foreign business.
Able is incurring a 3% per month penalty on the Preferred. Able’s Preferred related SEC filing registration has not been declared effective. This gives the Preferred holders the right to demand cash redemption at a 30% premium. Able does not have the funds to meet these obligations. This gives any Preferred holder a strong bargaining position versus Able’s inability to cure its E-Z Pass and debt defaults.
Able’s use of its MCI WorldCom service agreement and the State of New Jersey E-Z Pass contract to get vendor’s to extend credit has created complications for those investors anticipating a Chapter 11 filing. This short-term disappointment combined with rampant take-over rumors and the misleading NYSTA $43 million announcement may help explain the stock’s rise but do not add value to Able’s equity.
We await information about the alleged foreign investor and the announcement of Able’s restructuring.
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