Globalstar Telecommunications Limited GSAT Message Board

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Microcap & Penny Stocks : Globalstar Telecommunications Limited GSAT

GSAT 56.80

+0.2%

Nov 21 9:30 AM EST

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To: David Wiggins who wrote (6292)	8/3/1999 8:22:00 AM
From: Jeff Vayda	Read Replies (3) of 29987

To keep up with the competition: ICO CASH NEEDS INTENSIFY WITH LOAN PAYMENTS DUE, CREDIT DOWNGRADE (thanks to Phillips Telecon) ICO Global Communications [ICOGF] is facing heightened pressure to raise $1.6 billion to bring its system to commercial rollout. The proposed satellite phone service failed to raise the $500 million it sought in a rights offering that was cancelled last week and is facing a number of hurdles that it must clear to gain financing from other sources. The fallout from that failure led the Standard and Poor's credit rating agency to cut ICO's corporate credit and senior unsecured note ratings to "CC" from "CCC+." The downgrade was caused by ICO's inability to make interest payments to creditors Aug. 1, triggering an automatic 30-day extension. "ICO will likely be forced out of business if it fails to raise additional funding by the start of September," according to Standard and Poor's. The company's board of directors last week approved a financing proposal from several strategic investors that would provide additional investment in ICO totaling approximately $600 million. Those strategic investors expressed non-binding interest in investing $525 million in new class B ordinary shares and $75 million in convertible subordinated notes. Existing shareholders must approve the plan at a special general meeting on Aug. 28 to allow the financing to be completed on or about Sept. 2. Under the revised financing proposal: Class B ordinary shares would be created and would have 10 votes per share. ICO's outstanding ordinary shares would be redesignated as class A ordinary shares and would continue to have one vote per share. Class A shares would have the right to elect 40 percent of ICO's board of directors, as long as the class B shares represent more than 50 percent of the company's total voting power. New class B shares would be purchased for $5 per share. Strategic investors who sign binding subscription agreements by Aug. 10 also would receive a warrant to buy one class A share for each class B share purchased. The warrants could be exercised for one year at $3 for each class A ordinary share. However, the strategic investors must complete due diligence review of ICO's business and operations, business model and proposals for cost cutting, among other tasks. ICO expects that it will need to raise approximately $1.6 billion, including the funds targeted in its revised $600 million financing proposal, to fund its operations prior to the deployment of the ICO system in the fourth quarter of 2000. Rival Iridium LLC [IRID] already has failed to meet its loan convenants and is facing the need to restructure its finances by Aug. 12 to avoid a possible bankruptcy. Both ICO and Iridium are attempting to provide global, satellite phone service with medium-Earth-orbit and low-Earth-orbit constellations, respectively.

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