Thirty-three investors are listed in the company’s form 8-K filed this morning with the Securities and Exchange Commission (SEC). These institutional investors have bought over 67 million shares of stock at $1.15 a share, giving the company about $73.2 million in new cash. This is in addition to the roughly $300 million in cash and short-term investments it already had at the end of June.
The level of investment runs the gamut, from tens of thousands of shares to millions.
The Riverview Group LLC invested the most capital as part of this offering, buying up over 10.4 million shares for an aggregate price tag of about $12.0 million. Raptor Global Portfolio Ltd. wasn’t far behind. It also bought over 10 million shares for about $11.5 million. Smithfield Fiduciary LLC had the third largest investment with over 7 million shares for a total of about $8.7 million.
|Purchasers||Investment Firm||Number of Shares||Approximate Purchase Price|
|Chelsey Funding, LLC||Not Applicable||1,739,130||$2.0 Million|
|Cranshire Capital, LP||Not Applicable||1,733,913||$2.0 Million|
|Deephaven Small Cap Growth Fund, LLC||Not Applicable||3,043,478||$3.5 Million|
|Heimdall Investments Ltd.||HBK Investments L.P.||4,347,826||$5.0 Million|
|Columbia Ventures Corporation||Not Applicable||2,173,913||$2.5 Million|
|Nordural HF||Not Applicable||4,347,826||$5.0 Million|
|Smithfield Fiduciary, LLC||Highbridge Capital Management, LLC||7,608,696||$8.7 Million|
|Global Undervalued Securitoes Master Fund, LP||Not Applicable||2,608,696||$3.0 Million|
|The Riverview Group, LLC||Millennium Partners||10,434,782||$12.0 Million|
|Morgan Stanley Information Fund||Not Applicable||2,173,913||$2.5 Million|
|Portside Growth & Opportunity Fund||Ramius Capital Group, LLC||869,565||$1.0 Million|
|Ridgecrest Partners, LP||Not Applicable||470,565||$500,000|
|Catalyst International Ltd.||Not Applicable||185,000||$200,000|
|Quantum Partners LDC||Not Applicable||219,000||300,000|
|Ram Trading Ltd.||Ritchie Capital Management, LLC||2,608,696||$3.0 Million|
|Royal Bank of Canada||Not Applicable||869,565||$1.0 Million|
|Manfield Enterprises, Inc.||Sage Capital Growth Inc.||9,739,130||$1.2 Million|
|Tudor Proprietary Trading, LLC||Tudor Investment Corporation||1,035,652||$1.2 Million|
|The Raptor Global Portfolio Ltd.||Tudor Investment Corporation||10,040,869||$11.5 Million|
|The Tudor BVI Global Portfolio Ltd.||Tudor Investment Corporation||1,912,174||$2.2 Million|
|The Altar Rock Fund, LP||Tudor Investment Corporation||54,783||$60,000|
|British Columbia Investment Management Corp.||Wellington Management Company, LLP||136,000||$200,000|
|WTC-CIF Emerging Companies||Wellington Management Company, LLP||381,000||$400,000|
|WTC-CTF Emerging Companies Portfolio||Wellington Management Company, LLP||460,000||$500,000|
|Dow Chemical Retirement Plan||Wellington Management Company, LLP||271,000||$300,000|
|Government of Singapore Investment Corp.||Wellington Management Company, LLP||1,100,000||$1.3 Million|
|Howard Hughes Medical Institute||Wellington Management Company, LLP||289,000||$300,000|
|The Robert Wood Johnson Foundation||Wellington Management Company, LLP||306,500||$400,000|
|New York State Nurses Association Pension Plan||Wellington Management Company, LLP||169,000||$200,000|
|Oregon Investment Council||Wellington Management Company, LLP||770,000||$900,000|
|Retirement Program Plan for Employees of Union Carbide Corp.||Wellington Management Company, LLP||227,000||$300,000|
|Laborers' District Council and Contractors' of Ohio||Wellington Management Company, LLP||76,000||$90,000|
Investors may be licking their chops at the hope that Corvis stock has cratered after a meteoric rise and fall. Back in the summer of 2000, the company’s stock shot up to $83 on its first day of trading (see Avici and Corvis Make Stunning Debuts). Three years later, it’s trading at around $1.50. Unlike some of its larger competitors, Corvis has a strong balance sheet with very little debt and lots of cash. But it still suffers from heavy losses and poor revenue performance. During the second quarter of 2003, it generated only $27 million in revenues with a loss of $45.8 million (see Corvis Narrows Q2 Loss).
So why would investors be interested in Corvis? A big part of the reason has to do with the company’s acquisition of bandwidth provider Broadwing Inc. (NYSE: BRW) (see Corvis & Broadwing: Together At Last).
“It’s safe to say that without Broadwing, we wouldn’t have done this deal,” says Kipling J. Peterson, chief investment strategist for Columbia Ventures Corp. “Corvis is a much different company than it was six months ago, let alone when it first went public.” Peterson’s firm invested over $7 million in Corvis: $2.5 million from the main company, Columbia Ventures, and $5.0 million from its subsidiary, Nordural HF.
Peterson says he sees potential on the equipment side of the business, too. He cites the highly anticipated Global Information Grid Bandwidth Expansion (GIG-BE) contract that analysts predict could generate about $150 to $200 million over the next two years for Corvis (see Corvis Solo in Bake-Off Boast). Some analysts say that Corvis could win some business with AT&T Corp. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ), which also have active long-haul transport requests for proposal (see Verizon Deal: Too Soon to Hope?).
Rick Schafer, an analyst with CIBC World Markets says Corvis might be looking to get out of the equipment business altogether. During the second quarter of 2003, the company only generated $320,000 from equipment.
“If you look at Corvis, 99 percent of the revenue comes from Broadwing,” he says. “The equipment business is getting some traction, but it wouldn’t surprise me if they tried to sell off the equipment stuff.”
Investors are hopeful that the funding event will convince potential customers that the Broadwing subsidiary is viable on its own.
“Cash is king,” says Peterson. “It’s especially important for a service provider to have a strong balance sheet to show customers that you will be around for awhile.”
With or without the equipment business, Corvis still has a long road ahead of it. While Broadwing’s all-optical network is considered strong in comparison to its competitors, some say that selling bandwidth to carriers is a losing business model, considering the amount of unused bandwidth already available to them.
Several of Broadwing’s competitors have already gotten into serious financial trouble. Global Crossing Holdings Ltd., 360networks Inc., and Williams Communications Group (now WilTel Communications Group Inc.) all filed for bankruptcy protection. And Level 3 Communications Inc. (Nasdaq: LVLT) and Qwest Communications International Inc. (NYSE: Q), which has a wholesale business in addition to a local access business, have also struggled financially under heavy debt loads.
Broadwing, itself, struggled under its former owner, Cincinnati Bell, but Peterson says that the new Broadwing is different.
“The Corvis Broadwing has a much different balance sheet than it did under Cincinnati Bell,” says Peterson. “It has virtually no debt and lots of cash. When you can go to customers and show them this kind of balance sheet, it gives them peace of mind.”
While he is bullish about the company’s outlook, he admits there are still risks.
“The stock is still selling under $2 a share, so it’s no lay-up.”
Corvis shares rose $0.09 (6.57%) to $1.46 in trading today.
It appears that, so far, investors like the idea of selling off some of the Corvis shares to institutional investors. The company, though public, is tightly held, because the majority shareholder is CEO and founder David Huber.
— Marguerite Reardon, Senior Editor, Light Reading