Why did they make the announcement today? Well, for one thing, the debt called for big payments to be made to Loral and Qualcomm today, if my understanding is correct. And those payments were to the tune of MANY millions of U.S. dollars. GTL had to either make the payments or provide some public announcement as to why they were not making the payments (otherwise, LOR and QCOM shareholders would have demanded their companies sue GTL, which they might, of course, do anyway).
In a slightly different vein, I listened to the GTL CC today, and it was the most depressing experience since the last funeral I attended.
My observations, for what they are worth:
1. Only 31,200 total subscribers worldwide after nearly a year of marketing effort? I have been patient over the last year about the subscriber growth because so many GWs were in the process of coming on line in the latter half of the year and many of those GWs were in countries that should be prime markets for GTL (Brazil, Russia, China, etc.). But after almost a year there are no more excuses. I note 31,200 subscribers is barely half the number of subscribers Iridium acquired in its very short life span prior to BK.
2. There was no mention at all of ANY fixed phones being installed or in use. I have always believed the fixed phones held much more promise for high MOUs than the mobile phones and GTL's complete failure in the fixed phone area is appalling.
3. I found it significant that most of the CC participants were not shareholder representatives but bondholder representatives. I take this to be a clear indication that basically all of Wall Street has now completely written off the equity as being completely worthless.
4. BLS was so subdued he came across like a whipped puppy, much in contrast to his previous performances. His whole demeanor seemed so defeated that I suspect even he has finally come to doubt whether GTL can succeed.
5. BLS said the GTL partners all met in Paris just last week and then he gave us the usual crock about how all the partners reaffirmed their support and commitment to GTL. What an insult to everyone's intelligence! If they did reaffirm their commitment, they certainly didn't do so with new money. Instead, apparently, all they offered was more promises. Obviously today's default and public announcement had to have been a prime subject for discussion at the meeting (in fact, it was probably the main purpose of it). I have to believe that if all the partners were really committed to GTL they would have put up the additional funds needed to stave off default.
All in all, as a G* long to the tune of 4000 shares, I could not have been more depressed. For the first time, even I am beginning to think BK is really inevitable.
Lu Xun |
