<<G* a lot tougher to call, but we'll get that answer pretty soon.>
Here are two questions that you should ask yourself..
1.) Why hasn't LORAL state that they have nullified the revenue covenant, in order to relieve the doubt surrounding G* short term.. If Bernie wanted to continue raising funding via the tranche selling.. He would want to get G* price back up.. Bernie stuck a sword in GSTRF equity price by the WSJ article.. I don't think that was done by accident.. The Monday after the WSJ article, G* bonds started selling lower also.. Like 7 cents if my memory serves me... That obviously scared the bondholders into believing their investment was near worthless, and would soon be in BK.. That was BLS intent.. The lack of Press Releases of almost any form, regarding the progress of Globalstar have also been minimal. Not one word about IFN.. Except will be ready sometime next year... Maybe we could see a Press Release like.. "Qualcomm/ Rockwell announces Inflight System moving Swifty Through Regulatory Certification Process".. Anything at all.. But, NOTHING!! By LORAL buying the loan, it appears they are preparing to put the system in Bankruptcy.. They are just saving their satellites.. Everything points to Bankruptcy in April.. The money on hand is gone.. Bernie says no more LORAL money without significant indications of demand... The situation seems dire..
Question #2.. Why did he stop selling the tranches @ $7 and change? If he knew he was going to BK G* . Then raising interim financing for operations during BK would be paramount. If he knew the value of G* stock would plummet on the MOU news, and that it would be worth a few dimes in Bankruptcy.. Why not sell as much as possible, as fast as possible when the stock was @ $6 and change? Why would he not be selling the Tranches today at $2 and change.. The equity would be worthless anyway in BK.. So do a cash grab and get all you can, while the getting is good.. No he stopped the tranches as soon as he had enough money to get to late April.. (if my calculations are correct). Leaving the bondholders with a date that the bond interest payments would end anyway, and definite Bankruptcy!!
But allowing the money on hand to run out, and missing the interest payments would put the bondholders in control of when the Bankruptcy occurred.
The bondholders would posses the power!! Now BLS holds the Bankruptcy GUN! And in my opinion, he is going to point it right between the Bondholders eyes!!
Just think about these issues:
BLS controls bankruptcy threat
BLS convinces the bondholders that G* has no commercial value, in the near term. No press releases, No contracts, Just some sporadic phone sales
BLS convinces the bondholders that he is preparing to BK G*... LORAL states no more funding.. QCOM makes no indication about continued funding, LORAL is indicating Bankruptcy by getting their satellites out from under the G* loan.. In other words.. BLS didn't try to even get the covenant's on March 31, 2000 waived by the banks.. He just got Telstar 6 and 7 safely out of harms way.. It's kind of like someone getting ready to blow something up.. BLS is appears to be trying to get the Women and Children out of the way! LORALS assets.
Or it just the opposite of someone trying to sell a used car.. Instead of polishing it up and cleaning out the interior.. BLS has put G* up on some cement blocks in LORALS front yard.. Taken the tires and wheels off, given it a few broken a few windows.. And put a Sign on it.. reading "FREE!! YOU PAY TO HAUL IT AWAY!... There she is Mr. Bondholder.. Here's the key's.. Do ya wanna take'r fer a spin?
In the end BLS may convince the bondholders that accepting equity in lieu of cash for interest payments for a couple of years... is their only alternative.
If you look at his actions, and reactions over the last several months.. Including public statements when a reporter on CNBC asked.. "Have you ever considered BK for G*" He answered "NO".. Why! Because he really hasn't!! Now maybe a more appropriate question would have been.... "Have you ever thought about making it appear as though you were going to BK G* for the bondholders" Maybe that would be a better question.
PCSTEL |
