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CommScope falls after announcing note, share offer

Fri, 05/22/2009 - 8:00am
The Associated Press

NEW YORK (AP) – CommScope Inc. shares sank Thursday afternoon after the network infrastructure company said it would offer 8 million common shares and $200 million in senior subordinated notes due 2015.

Shares of CommScope fell $2.61, or 10.4 percent, to $22.42 in the first day of trading after the company's late-Wednesday announcement. A company's stock often falls after a share offering is announced since this can dilute the stakes of existing shareholders.

CommScope said its underwriters will have 30 days to buy up to an additional 1.2 million shares. It also said underwriters will have 30 days to buy up to an additional $30 million principal amount of the notes.

The company intends to use proceeds from the offerings to pay down debt and for general corporate purposes.

In a client note, Morgan Keegan analyst Simon M. Leopold kept his "Outperform" rating for the stock, saying the announcement is another tool that makes it more likely that the company will be able to stay in compliance with debt covenants. He also noted that the company has asked for an amendment to its senior credit facilities.

"Although investor sentiment has improved and management has said it anticipates meeting the debt covenants, the action should reduce remaining doubts," he said.

More Broadband Direct 05/22/09:
•  ACA survey: Retransmission agreements unfair
•  Report: Cablevision not planning on going private
•  Qwest listening to offers for its fiber-optic network
•  Mosley moving on from WICT
•  Vantrix talks convergence, competition, content
•  New French law on Internet piracy meets skepticism
•  CommScope falls after announcing note, share offer

 

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