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Microcap & Penny Stocks : Globalstar Telecommunications Limited GSAT
GSAT 61.03-1.2%Dec 31 3:59 PM EST
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To: Activatecard who wrote (4177)4/25/1999 6:43:00 PM
From: Goodboy  Read Replies (1) of 29987
 
That is my point. Motorola has already reserved against their potential losses in Iridium. They haven't reserved for any future funds that they would commit. Iridium has the right to initiate a capital call, thus forcing Motorola and others to pump in more equity, which will fall behind both the bank debt, bonds and Motorola's creditor interests (the master service agreement which has been deffered until 2001). While no investor in Iridium will walk away from this without major losses, Motorola will end up better than most.

They hold the chips since they are the largest creditor and have guaranteed a large portion of the bank debt. In a restructuring, they will seek to at least double their equity stake in return for other concessions regarding vendor financing and bank debt guarantees. If anyone will walk away with the bank, it will be Motorola. The downside for them is that even with a restructuring, the demand never fully materializes, thus any newly commited capital will be burned. The losers here are the public and strategic equity investors and the bondholders. The bank debt will be paid and Motorola will end up with the lion's share of the equity plus resturctured debt and hopefully milk the system to return their investment.
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