OTELCO (OTT)

[renoldman]

See, the shares of OTT are a hybrid of equity and debt.

The company has exercised its right to suspend the interest payment on the debt portion that holders of OTT hold.

In actuality they can not pay the interest portion up to 4 times in total and 2 times consecutively.

The company also has a large debt to GE that is due in 2013 (October, I believe).

Here is something from the annual report:

"We Have a Significant Amount of Debt Maturing in October 2013.
We currently have outstanding $162.0 million of debt under our senior credit facility that matures in October
2013. We will be in default under the senior credit facility if we are unable to refinance this debt at or prior to its
maturity. There can be no assurance that market conditions will allow us to refinance this debt at or prior to its
maturity on terms that are acceptable to us, or at all. Any such refinancing may contain covenants that could limit
in a significant manner our ability to pay interest on our senior subordinated notes and dividends on our common
stock."

Do you think someone will lend them more money when they have been eviscerated?

If you look at the chart, it is pretty obvious that someone pumped this stock up to unload.

I am not a short, I did buy the shares at $2.20 and sold above $3

The technicals lined up and I took the trade, fundamentally though, this stock is toast.

Institutions always pull this stuff to unload positions.