Tahoetech,
as a G* debt holder, I, personally, am willing to accept a conversion of my debt to G* equity at a 4:1 ratio relative to the current G* equity, using current market prices for debt and equity. If the other debt holders and equity holders accept this, this will avoid BK and possibly result in a healthy G* much quicker than the BK route.
Here is a possible reorganization scenario.
There is currently roughly $3 billion in debt. $1.5 billion notes, $500 million BofA, $250 million Chase, $750 million VF etc. (my WAG -- please anybody correct). The current market price of this debt at roughly 18 cents on the dollar is $540 million.
There is currently roughly $800 million in equity -- $265 million GSTRF times 3 for the total G* equity. So, using a 4:1 ratio, the equity is reduced to about $200 million.
A new equity investor puts in $260 million of new money, which will easily stretch the life of a debt-free G* to cash breakeven (my guesstimate).
So based on these numbers, current debt holders get 540/(540+200+260) = 54% of the equity, current equity holders get 20% and the new investor gets 26%.
This will mean, for example, that Loral will end up with roughly 24% of a debt free G*: 10% for Loral's current equity stake and 14% for its debt -- I am guesstimating Loral's G* debt at $750 million, the bulk of it the $500 million BofA loan.
Kyros
Edit: This scenario gives the current GTL shareholders 7% of the new debt-free G*. |
