Win-Lose-Draw..
"The effect on G* equities might be continued downward pressure to create a stronger and stronger impression of the company Doin' The Titanic, and that will last until LORAL finishes poking bondholders with a sharp stick."
It's kind of like someone dropping a baby from 5 feet in the air.. Everyone Gasps as everyone is sure bodily damage is about to occur.. The people around the spectacle Scream "Oh My God, Catch the Baby!!!" Then the person who drops it catches it inches from the ground!!
Bernie has dropped Gloablstars' satellites and the company, and the are falling, and he is betting that the bondholders will YELL, "Oh My God, Catch the Baby" at the last minute If not, they may end up on the ground in thousands of little pieces.. And Bernie will be more than happy to distribute the appropriate amounts of these little pieces of satellites to those "Atypical Bondholders" if they indeed hit the ground.. But, in reality.. I think that BLS will be the bondholders friend.. And the bondholders will be begging Bernie to catch the falling baby!
I think the company is just after a "re-alignment of the bond interest payments", "maybe a reduction in the overall interest rate, and a re-issue of the maturity date!"
Something like that!!
Something like this.. So the bondholder get's 2 years worth of GSTRF common in lieu of cash interest, the bonds immediately start trading at more than .10 on the dollar.. So even for the "atypical bondholder who bought at .10 on the dollar.. Their investment is worth a 100% more if the bonds trade @ .20 cents on the dollar.. 200% at .30 on the dollar, 400% at .40 cents on the dollar. Not a bad days work for the "Seven minute investor". It's hard to make those kind of "overnight returns in today's market environment"!! Don't you agree!!
So the agreement among the bondholder may be that the next quarters bond interest payments will be paid in GSTRF equities based on the price of GSTRF on the day of the agreement.. Maybe $3 a share.. Upon the conclusion of the agreement and the announcement.. There are 9 or 10 million shares still sold short... I think they would cover.. So now maybe GSTRF is worth $7 a share.. The bondholders payment is received at a value of GSTRF @ $3 a share.. That a two bagger also for the bondholder! And the dilution to the common would be the same, or less as if BLS finished the tranche sales at today's equity price of $2..
In other words, the dilution is nearly the same to the common if Bernie started selling the tranches today @ 2 1/4 and raised 60 million dollars to pay the bondholders interest payments for a quarter. Yet for the same amount of dilution, maybe less, he gets the "typical and most atypical bondholders" to accept GSTRF equity in lieu of cash payments for the next two years!! Now that is a great deal for the Common, and the Bondholders.. It's a WIN,WIN.. Any other outcome is a LOSE, LOSE for most... That is my SPECULATION!!
PCSTEL |
