ING Barings call on LOR/GSTRF valuation gap:
"July 15, 1999 (Bruce Springsteen's Opening US Tour Date at Meadowlands
Arena!)
Loral Space & Communications (SB-$21)
Significant Globalstar Valuation Gap, Reiterate Strong Buy - NOTE ATTACHED
ú We believe that there is a large valuation gap between Globalstar
Telecommunications~ (OTC: GSTRF-30)
and Loral; we are reiterating our Strong Buy rating. We believe that
Globalstar at $30 should
equate to a $27 price for Loral stock.
ú Loral has ownership of several satellite related subsidiaries; on a
sum-of-the-parts basis, we believe it is
worth the following:
ú Globalstar:
ú We estimate that Globalstar has 251 million partnership shares outstanding
while Loral, we estimate has
289.7 million shares outstanding. We estimate that with warrants received in
the recent bank financing,
Loral should own approximately 49% of Globalstar. Therefore, every $1.00 of
share price appreciation
in GSTRF, should equal $0.43 in LOR's stock price . Based on this math,
Globalstar should equal
around $13.00 per Loral share.
ú Space Systems/Loral:
ú At approximately 1X sales, we estimate that SS/L is worth roughly $5.00
per Loral share.
ú FSS Businesses
ú We value the total FSS business at approximately $12.00 with an average of
14X our 1999 EBITDA
estimate for these businesses.
ú Cyberstar and Other Assets
ú We value Cyberstar at approximately $1 per share and the other assets
including CD Radio, Aguila II,
Skybridge, DBS slots and ownership in Europe*Star at approximately $2.50.
ú Finally, we subtract our ending net cash of ($5.50) to reach our ending
price target of $27.00.
Loral Valuation 1999
SS/L $5.00
Globalstar 12.00
Skynet 7.00
Orion 3.00
SatMex 2.00
CyberStar 1.00
Other Assets 2.50
Net Debt/ Share (5.50)
Total $27.00
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