SG Cowen Downgrades WorldSpace to Neutral

Analyst Tom Watts indicates the company could face liquidity issues in 2007

SG Cowen downgraded WorldSpace (WRSP) to neutral from outperform, explaining that the company faces higher risks given its debt.

Analyst Tom Watts says a recent question and answer session with the company focused on the likelihood that the company's $155 million in Convertible Promissory Notes will be put to the company on Dec. 31, 2007, if WorldSpace's stock price falls below the $13.52 conversion price. (It currently trades at around $9 per share.) He says this could create liquidity issues in 2007 and notes that management guided to cash burn in 2006 of $9 million to $12 million per month.

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