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The Frontier Communications' Board Needs A Reset: Here's Why And Here's How
Apr. 20, 2019 12:58 AM ET|6 comments | About: Frontier Communications Corporation (FTR)
The Owl
The Owl
Balance Sheet Analysis, Deep Value, long-term horizon, debt
(2,503 followers)
Summary
Frontier has lost 98% of equity value since the CTF acquisition was consummated, so the strategies of the board and company leadership have been value destroying on an epic basis.
There appears no respite in sight for equity owners as short interest, options market implied volatility and debt discounts all suggest strongly that failure appears to be certain.
While many have focused on the CTF acquisition as the cause for decline, decisions made after this acquisition have aggravated an already difficult situation, with no change in sight.
The past destruction of equity value, the clear signs of market skepticism about the future, and serious, structural flaws in decision-making all justify a need for fresh, re-directed board leadership.
This article is intended for investors oriented towards value-deep, value-distressed asset investing. Those seeking moderate- to high-risk value investments may have an interest in this article. Investments in this company at any level of the capital structure are unsuitable for those seeking retirement income, and I strongly discourage purchase of securities related to this company for retirement income accounts, where a focus on risk aversion should be paramount.
It's that time of year yet again, with an opportunity to select the leadership of many of the companies in which we invest. Normally, this is a routine affair for many investments.
However, there is nothing routine about Frontier Communications (NASDAQ:FTR). For the first time in a long while, I plan to vote against the majority of the board members of this company. In decades of investing, I have voted against a majority of a board only a few times (Baltic Trading in 2013 was the last one, and I cannot remember one before that). Why I am voting to withhold for a majority, but also why I am not voting against all of the board members, is reviewed below.
What It Has Done - Equity Performance of FTR Since the CTF Acquisition
Here is a summary of equity performance of Frontier Communications' common shares since the CTF acquisition through April 16th, 2019, market close:
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http://seekingalpha.com/article/4255509-frontier-communications-board-needs-reset
Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
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