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On this, the last day of Q3 09, markets fell in early trading on better than expected news about the economy which dipped 0.7% in Q2 while many companies like Knology (KNOL) and Rex Energy (REXX) were re-working borrowing agreements ahead of the upcoming earnings season and many more companies were desiring to add to their top-line revenues like TerreStar (TSTR) did today, announcing a new order for its satellite phones from AT&T (T).
With the new Q2 GDP report today from the Commerce Department today providing proof positive the U.S. economy shrank less than expected, the 'recovery' stage of the recession cycle has been confirmed. Q1 GDP dropped 6.4%, the worst drop in 30 years.
Economists were widely looking for a 1.1% drop in Q2. But the U.S. broad markets like the S&P 500 remain nervous believing Q3 corporate earnings will be largely based on bottom line cost containments and top line revenues from sales will be few and far in between. I think the August-September flurry in M&A and IPO activity is a clear signal that Q3 was the turning point to economic growth. Friday's lagging indicator on unemployment won't help matters, but I think it's already counted into most forecasts.
Gaining 17.37% ($0.37) this morning is TerreStar Corp., (TSTR) http://www.terrestar.com/ currently trading in the $2.48 range on the Nasdaq. TSTR has a new market cap of $345 million. TSTR has a 3-Month average daily trading volume of 1,523,170 shares and it shot past 5 times that volume two hours into today's session.
TSTR garnered that 'top line' exclusivity this morning on news that AT&T (T) plans to sell a satellite phone from TSTR that can place calls even in the deep wilderness or at sea.
The TSTR 'Genus' phone, due to roll out in Q1 of 2010, will have all the features of a standard 'smart' phone, including a touch screen, but it also will be able to connect to a TSTR satellite for service in parts of North America where cellular networks generally can't reach or where cell towers have been knocked out by disasters like hurricanes or firestorms. Dallas-based AT&T said it plans to market the phone first to business and government customers, and later to consumers. TSTR defined the usability of the phone noting it will need a clear view of the southern sky, which means it will be difficult to use indoors.
TSTR engages in the integrated satellite wireless communications business in North America. The company, through its subsidiary, TerreStar Networks Inc., intends to build, own, and operate an Internet protocol based integrated satellite and terrestrial communications network to provide mobile communication services in the United States and Canada. TSTR, through its another subsidiary, TerreStar Global Ltd., also intends to build, own, and operate a Pan-European integrated mobile satellite and terrestrial communications network to address public safety and disaster relief, as well as to provide broadband connectivity in rural regions to help narrow the digital divide.
At $2.48, TSTR will surpass its previous 52-week high of $2.25 set on 06-22-09 and is far above its 52-week low of $0.21 set on 11-21-08. At $2.48, TSTR is ahead of both its 50-day and 200-day moving averages. TSTR has trailing twelve month revenues of $139 million. TSTR is widely held by institutions. Its shares out versus float ratio is near-parity.
Gaining 10.66% ($0.79) today is Rex Energy Corp., (REXX) http://www.rexenergycorp.com/ which is currently trading in the $8.20 range on the Nasdaq. REXX has a new market cap of $302 million. REXX has a 3-Month average daily trading volume of 393,342 shares and it easily doubled that volume two hours into today's session.
REXX is an oil producer and while Europe pushed oil above $67 a barrel this morning, supply and demand was not the reason for REXX's gain this morning. As a matter of fact, even a recent downgrade from CapitalOne SouthCoast from 'add' to 'neutral' couldn't keep investors from buying REXX this morning.
A Steady Line of Credit
REXX management said today that its bank group has unanimously reaffirmed the $80 million borrowing base under its revolving credit facility as part of the regularly scheduled semi-annual borrowing base redetermination. No amendments were made to the terms of the revolving credit facility in connection with the borrowing base redetermination.
As of September 21, 2009, REXX had $15 million outstanding under the credit facility, which will mature September 28, 2012. The next redetermination of the borrowing base by the 5 bank group is scheduled for April 2010.
REXX is an independent oil and gas company that operates approximately 2,314 wells.
At $8.20, REXX is less than half its 52-week high of $16.46 set on 09-30-08 and is far, far above its 52-week low 0f $0.99 set on 03-05-09. At $8.20, REXX is ahead of both its 50-day and 200-day moving averages. REXX has trailing twelve month revenues of $58 million. REXX is widely held by institutions. Its shares out and float ratio is close enough not to raise any red flags about stability.
Another Good Balance Sheet Development
Gaining 7.30% ($0.65) this morning is Knology, Inc., (KNOL) http://www.knology.com/ currently trading in the $9.55 range on the Nasdaq. KNOL has a new market cap of $344 million. KNOL has a 3-Month average daily trading volume of 167,054 shares and it handily doubled that volume this morning two hours into the session.
KNOL is still benefiting from Monday's announcement by management that the Company has obtained consent from its lenders to amend its credit facility.
Relaxing its demands on KNOL, certain term loan lenders have extended by two years the maturity date of an aggregate $397 million of term loans. The extended term debt will mature on June 30, 2014, and will bear an interest rate of LIBOR + 3.50%, with no LIBOR floor provisions (Libor: London Interbank Interest Rate).
The KNOL amendment also, among other modifications, increases the revolving credit facility to $35 million from $25 million and allows for an annual, cumulative restricted payment allowance of $10 million for dividends and/or share repurchases utilizing excess cash flow and subject to a maximum leverage test.
M. Todd Holt, President and Chief Financial Officer of Knology, Inc. said, "We are pleased with the outcome of this amendment to extend a significant amount of our term loan maturities. The current credit and interest rate environment allows us to better manage our balance sheet on a longer term basis, while at the same time improve the already healthy free cash flow profile of the business in the years to come."
KNOL provides video, voice, data, and communications services, including analog and digital cable television, local and long-distance telephone, high-speed Internet access, and broadband carrier services to residential and business customers. KNOL owns and operates a 750 MHz interactive broadband network. As of December 31, 2008, its network passed approximately 919,000 homes and had approximately 676,794 total connections.
At $9.55, KNOL is below its 52-week high of $10.18 set on 08-04-09 and is above its 52-week low of $3.70 set on 10-28-08. At $9.55, KNOL is ahead of both its 50-day and 200-day moving averages. KNOL has trailing twelve month revenues of $419 million. KNOL is widely held by institutions. Its shares out versus float ratio is near-parity.
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