Yesterday, Verizon Communications Inc. (NYSE:VZ) CFO Francis J. Shammo announced his retirement, scheduled by year-end. Before leaving his post, he will transfer his duties to Matthew D. Ellis by November 1, 2016.
Shammo has announced his retirement during a time when the company is going through extreme liquidity crunch. During his tenure, the company grew multifolds yet recent acquisitions of Yahoo! Inc. (NASDAQ:YHOO) and FleetMatics Group PLC (NYSE:FLTX) raised concerns among investors.
Verizon’s Debt Situation
On July 26, 2016, Verizon announced its second-quarter financial (2QFY16) earnings. Even though the company declared upbeat bottom-line earnings, its highly leveraged balance sheet created concerns among investors. Verizon had $99.73 billion liabilities, which reflected 4.8:1 debt-to-equity ratio by the end of the reporting quarter. Against the ratio, the net cash flow available was $2.86 billion.
Despite a weaker balance sheet, on July 25 Verizon’s management entered a definitive agreement to acquire Yahoo against $4.83 billion cash. A week later, the company signed a separate agreement with Fleetmatics against $2.4 billion cash. Both these agreements are currently pending over regulatory approvals from relevant authorities.
Verizon’s Authorized and Issued Shares
Ever since the acquisition deals, Verizon’s debt position remained the talk of the town, where market pundits kept assessing its balance sheet to find out the ways of debt reduction and making cash payments against recent acquisitions.
As per the US Securities and Exchange Commission (SEC) record, Verizon is authorized to issue total 6.5 billion shares. These shares are divided in two categories; 6.25 billion shares come under common share of $0.1 par value, while 0.25 billion shares are preferred share worth $0.1 par value. So far, the company has issued 4.08 billion common shares, which has left a room for 2.17 billion common shares and 0.25 billion preferred shares to be offered.
Intention for Common, Preferred stock Issuance
Yesterday, In line with market expectations, the company has applied for SEC approval against issuance of common stock, preferred stock, and debt securities. Neither quantity nor amount was mentioned in the submitted proposal.
Verizon intended to utilize the gathered proceeds to reduce debt, pay capital investments, funding working capital requirements, or other general corporate purposes, including financing acquisitions and refinancing existing indebtedness. The approval from SEC is likely to calm down the anxious investors.