Globalstar Telecommunications Limited GSAT Message Board

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Microcap & Penny Stocks : Globalstar Telecommunications Limited GSAT

GSAT 69.06

-5.5%

Dec 15 3:59 PM EST

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To: Goodboy who wrote (5203)	6/17/1999 8:50:00 AM
From: Art Bechhoefer	Read Replies (2) of 29987

As I have noted on the QCOM thread, there is another way to make a lower risk investment here. Globalstar has junk bonds with a coupon from 11-1/4% to 11-3/8% and maturities in 2004-2005. These bonds are sometimes difficult to purchase in small amounts ($10,000 face value is about the minimum a broker will even consider). But the asking price for any of the series currently ranges around 65% of face value. That gives you a yield close to 17% on the basis of cost and close to 25% to maturity. Normally a junk bond would be considered very risky, which is why it's called junk. But in this situation, you have two major shareholders (QCOM and LOR) who would not like to see their company go into default for not being able to make interest payments on the bonds. Thus, it looks to me like a pretty good investment, and safer than the stock. Note that the higher debt level of a company, the more risky its stock becomes, especially when it isn't generating enough cash flow to cover interest payments.

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