Globalstar Telecommunications Limited GSAT Message Board

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Microcap & Penny Stocks : Globalstar Telecommunications Limited GSAT

GSAT 63.80

+4.2%

2:04 PM EST

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To: gdichaz who wrote (9427)	1/10/2000 4:16:00 PM
From: Maurice Winn	of 29987

Chaz, there was an earlier plain and simple rights issue. I quite like the mix of debt and equity funding along with service providers funding the terrestrial components. When the system is shown to work, [by being hugely profitable] the shareholders will capture risk value which the lenders won't take on by buying the equity instead of lending. I can fund the stock cheaper than the lenders can. Alan Green$pan lends to me at 7.5% and I buy the new stock. Interest charges by lenders are a LOT more than that. So I'm keen to put more money in rather than pay high interest charges to somebody else. But margin borrowing is much more risky than term loans - even if Globalstar share price drops to $10, Bernie's borrowing won't need to be paid back but if we margin borrowers get caught, we'll be out at the bottom. So there is some ideal balance of Globalstar debt, equity, margin debt and revenue to fund the system and the second constellation. I'm not sure what the ideal balance is, but I haven't noticed that debt is out of kilter. The way the balance IS out of kilter is that revenue is slow developing and unused minutes are being wasted at about 1 billion per month! 30 million minutes a day! At 20c per minute, that's $6m per day going down the drain. At 40c per minute, that's $12m per day being 'opportunity costed' away. This slow motion rollout is very frustrating, and as Valueman shows, this is not for everyone. The Service Providers are asleep at the wheel. Luckily, the business model will leave the most dozey of them out in the cold as the more competitive get the business and leave the slow developers with few minutes available. We are some time from that situation, but it will come and it will be too late then for the slow service providers to rescue themselves. They'll have to wait for the next constellation to be built. Maurice

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