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Microcap & Penny Stocks : Globalstar Telecommunications Limited GSAT
GSAT 64.09+7.0%3:50 PM EST
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To: Gregg Powers who wrote (15822)8/21/2000 1:27:54 PM
From: RalphCramden  Read Replies (1) of 29987
 
To Gregg:

The thing I really would like to see addressed in your analysis is what will the return to PRESENT shareholders be.

Lets accept the proposition that G* will be a successful business using the current satellites, the current phones, and the current partners all selling service to the various markets within each of their franchises.

But my nightmare as a current shareholder is this: the owners of G* when it succeeds are not really the current owners (stockholders like me) anymore. My nightmare is we have been diluted away or even bakruptcyed away.

Bankruptcy, or even near-bankruptcy (where ownership is incredibly diluted in order to, as a condition of, raising required cash) seems somewhat likely. I'm not enough of an MBA-type to put a percentage on it, but lacking that training 50% probability that equity is heavily diluted before the cash is rolling in seems plausible.

Bankruptcy or near-bankruptcy-dilution seem acceptable to the "elephants" as long as it occurs without a service interruption. And that seems quite plausible. Clearly, keeping the constellation operating preserves much more value in the asset than otherwise, so I would expect bondholders, service provider partners and whomever else to support that.

So IF I am correct that bankruptcy or near-bankruptcy-dilution can be accomplished without interrupting operations of the constellation, than I would expect service providers and current bondholders to SUPPORT it, as it allows for needed cash to be raised and/or reduces obligations of G* LP.

So what I would love your opinion on are:
1) Will the elephants blithely allow bankruptcy or near-bankruptcy of G* LP, or is there some value to the elephants in funding G* LP in such a way that avoids large dilution of current shareholders ownership?
2) How close is/will G* LP come to meeting the accounting requirements to be declared bankrupt before it is healthily solvent?
3) What are your expectations of current shareholder's reduction of return due to dilution? (It seems to me you only addressed loss of return due to the business being bad.)

Thanks,
Ralph
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