Loral Space & Communications Message Board

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Technology Stocks : Loral Space & Communications

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To: Jeff Vayda who wrote (5108)	1/7/1999 1:30:00 PM
From: mmeggs	Read Replies (1) of 10852

It seems to me like this financing was the best possible option. The convertible feature has lots of advantages. 1. Do not have to offer as high a coupon as you would with straight debt (Bonds were at 17% YTM last I checked) so there is lower interest expense. 2. Convertibles have higher conversion prices than current prices, often well-above. If/when dilution occurs, you're a lot less concerned aboput it b/c the stock is quite a bit higher as well. 3. Given the amount financed, I would bet that they are fairly confident about upcoming launch schedule and the positive impact this will have on future needs to raise cash. (Raises $350 million, with $600 million projected deficit until startup.) 4. Since they are in fact selling to Loral, as someone already implied, this puts pressure on other partners to increase their proportional stakes as well. Better than straight junk, better than secondary offering, better than warrants. Of course, not as good as two successful Zenit launches with 32 sats in space as we speak. mmeggs

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