Reconnecting with FSNN in Front of the Birch Closing

When last we wrote about Fusion, the stock was at $3.75 and we were selling out of the position. It had been a great winner, and, at $3.75, it was not exactly expensive. However, they were looking to raise a large amount of debt to fund their acquisition of Birch and it seemed like there was some risk around that closing smoothly; so, we took our money off the table.

Fast-forward to today and things have changed a little bit. First off, shares of FSNN are trading at $2.86, a nifty 25% or so decline from our sale price. It’s back firmly in “cheap” territory.

Secondly, Fusion recently issued $40M of stock at $3.25. This pads their balance sheet in advance of their debt transaction; frankly, I’m guessing the bankers made them do it. Without this funding, perhaps the debt deal was at risk? I don’t know, but this should help things along.

Finally, the Company has engaged some first class firms to raise them their debt. With Goldman and others engaged, and with the additional equity in the firm, I’m now sure the debt deal will close.

All of which means that Fusion is trading below a recent financing and on the verge of a major catalyst that will make them at once wildly cash-flow positive and ridiculously cheap on an EV to EBITDA standard.

The risks associated with FSNN when it was at $3.75 are gone. It’s time to get back on board.

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