cfoent, I think MOT's overall exposure to I* is approx. $1.5 billion ($750MM in loan guarantees, approx. $300MM in assets and the balance in equity investment). Big potential quarterly (how about for the fiscal year!!!) charge if I* folds its tent/MOT admits I* is going down the tubes for good (i.e., not coming out of Ch.11 with a plan of reorganization). MOT has to make a public declaration of confidence even when all signs point to a steep, uphill slog.
These situations are part game of chicken (who--MOT, banks, other equity investors--willing to go farthest to test the others' resolve to pony up or rip up the tracks, satellites, that is) and part crude bargaining power. The banks are the obvious favorites early on to force MOT to pony up, but banks have the realities of their own potential losses, so the parties look for common ground and approximately equal pain (taking into account that the banks are the creditors, so their pain threshhold is a lot higher, i.e., MOT and I* and investors have to put more on the table).
Regards. Steven
PS John G, saw your post in editing: as discussed, I don't think MOT can or will simply say to its S/H and directors that it's going to eat $1.5B in charges. As per Q-MOT lawsuit discussion, it would be a colossal embarassment to admit so glibly a colossal mistake. (Hope they have to, though! <g>) |
