Globalstar Telecommunications Limited GSAT Message Board

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Microcap & Penny Stocks : Globalstar Telecommunications Limited GSAT

GSAT 60.65

-0.6%

12:59 PM EST

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To: djane who wrote (5823)	7/18/1999 12:34:00 PM
From: djane	Read Replies (2) of 29987

Barron's on I* bonds Last week Iridium came down to earth. The company announced it would not make a $90 million interest payment due Thursday on its bonds. Now Iridium has a 30-day grace period during which it can either pony up the funds or bond investors get the right to push the company into bankruptcy protection. Needless to say, it's not good news for the bonds. The price of Iridium's 14% bonds due in 2005 fell to about 18 from 20, and started trading without interest. The company has $1.62 billion of bonds and $1.1 billion of bank debt outstanding, so a bankruptcy would be awfully painful, even though the bonds are trading at such depressed levels. What's surprising is the stock still trades around 6, when it could quite easily be utterly worthless if the company restructures -- a discrepancy noted here (Trading Points, April 5). "The bond market is telling you that the bonds and the banks will get all of the equity," says one bond player. Apparently, the stock has been kept afloat by investors trying to cover their short sales. There seems to be no other compelling reason to buy the shares. E-mail: jacqueline.doherty@barrons.com

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