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 Technology Stocks : METROMEDIA FIBER NETWORK (MFNX)

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To: Capitalizer who started this subject8/2/2001 2:00:35 PM
From: Puck of 1983
 
Kaufman analyst report:

METROMEDIA FIBER NETWORK, INC. (MFNX_ $0.87) Vik Grover, CFA, 212.292.8123
Rating: STRONG BUY vgrover@kbro.com
Price Target: $10 Osman Parvez, Associate

Fiscal Year-End: December 31 2000A 2001E 2002E
Diluted Shares: 607.9MM EPS (New) -- -- --
Market Cap: $358.7MM EPS (Old) ($0.76) ($1.18) ($1.09)
Long-Term Debt: $2.62BN P/E NM NM NM
52-Week Range: $40 - $0.49 Revenues (New) -- -- --
Avg. Daily Volume: 12.6MM Revenues (Old) $118.2MM $410.3MM $625.4MM

SEARCH FOR FUNDING MAKING PROGRESS; MAINTAIN STRONG BUY

• MFNX has received an extension on its due date for a $350 million credit facility to August 15.
• Management indicates that on top of the $62.5 million committed by Citigroup (C $50.21), affiliates have committed $180 million,
leaving a deficit of $107.5 million. As we had predicted, the company is actually seeking an expanded financing package, including
$200 million in vendor lines bringing the targeted raise to $550 million, which we believe would fully fund its plan.
• Bears on the stock continue to point to the fact that MFNX has still not raised the full amount of the required $350 million, a sign
of distress. We respond to this statement by pointing out that MFNX (1) has best-of-breed assets in the metro loop where
substantial pent-up demand for optical bandwidth persists providing visibility to growth; (2) last reported backlog in the billions of

THE MORNING EXCHANGE
PART II

AUGUST 1, 2001

Call the KBRO Trading Desk at 1.800.807.8723 The Morning Exchange . Part II _ 2
dollars supported by anchor tenants Verizon Communications (VZ $54.15) and SBC Communications (SBC $45.00); (3) has
deferred revenues of $500 million which provides a vehicle for collecting cash as network resources are delivered to customers
over the coming months; (4) had roughly $400 million in cash at the end of 1Q01; and (5) has substantial investors in terms of
Metromedia Co. and Verizon which even yesterday affirmed their belief in the company. All of these support the notion that
MFNX will close its funding gap by mid-August and put this issue to rest.
• We continue to believe this name is very undervalued at current levels which give MFNX an EV/PP&E multiple of 1x, especially
since it appears MFNX is close to completing a relatively non-dilutive financing contrary to other claims. We maintain our
STRONG BUY rating and $10 target.
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