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Technology Stocks : IRID - Iridium World Communications IPO Announced!
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To: CMon who wrote (1829)5/27/1999 10:29:00 AM
From: Bob Rudd  Read Replies (1) of 2693
 
C'MON: <<Some have speculated that the gateway operators that hold equity make it difficult for the creditors to force [BK]>> It might be a bit of a public relations flap for Motorola et al to let this fall apart then come back and buy the pieces for 25% of prior enterprise value...I get the impression Motorola has plans built around this, so they're going to have a presence. If they royally screw the debt holders as part of the process, they're not gonna be able to wear white hats for quite awhile...lot's of bad press. There's liable to be some legal efforts to get them to pay in the aftermath...especially if they buy the birds back on the courthouse steps.
Right now the debt, trading at same level as say...Service Merchendise, which is in BK, is definitley saying the gateway guys are gonna blow-off the equity and buy the birds back for 20 cents on the dollar and take the bad press and legal hastles in stride.
The equity is betting that the gateway guys reach at least a compromise with the debt holders that avoids BK and leaves equity in tact with a less leveraged financial structure.
The odds appear to be shifting towards the former view as the equity has melted like ice-cream in July...losing 2/3's of it's value in 3 months.
What would be the odds for some sort of compromise where the gateway guys provide additional capital for interest concessions or revaluation of bonds that leaves equity intact at near current levels and improves bonds situation enough to avoid bad press and legal blow-up?
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