Loral actually purchased some of the outstanding G* debt a couple of weeks ago. That act saved G* from being in violation of its loan covenants and being forced into bankruptcy prematurely. What is missing from the discussion here, I think, is that both Loral and QUALCOMM have said they don't want to invest more money in G* or provide more to bail out the company. This is one reason why the stock is now nearly worthless.
I think the argument that the service providers are failing to do their job of making the service more popular is hard to document. But if it is true, then there must be a motive. Would the motive be that one of the main providers, Vodafone AirTouch, wants to take over the company at a bargain price? I don't know the answer, but as I have said many times, it is likely that G* shareholders will be disappointed, no matter what happens. Bondholders, however, stand to do quite well, even if the company goes bankrupt. Why? Because bondholders stand near the front of the line when debts get paid as a result of either liquidation or reorganization. Any company that wants to take over G* can do so, but is not relieved of G* debts. In a liquidation, which I think is not a very great possibility, the bonds might be paid off at more than 50 cents on the dollar. If the bonds can be purchased now at 10 cents on the dollar, it doesn't sound any worse to me than buying a modestly speculative stock.
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