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Microcap & Penny Stocks : Globalstar Telecommunications Limited GSAT -- Ignore unavailable to you. Want to Upgrade?

To: Jon Koplik who wrote (6206)	7/28/1999 10:05:00 PM
From: John Stichnoth	Respond to of 29987

Jon, the Eastern Airlines analogy can't be taken very far. Eastern had substantial assets (read, airplanes!) that were pledged as collateral on substantial portions of their loans. When they started to default, there was value possible to the secured lenders. in irid's case there are no assets that will be worth anything. Thus, the lenders may have incentive to let things limp along in the hope of getting some value in the end. Their reward for this forebearance would likely be much of the equity in the company. But of course, they can't wipe out the existing equity holders completely, because some of them are the actual managers of the enterprise. (That is the "float" shareholders' only hope, in my view). And they must have some incentive to keep going as well. The only way irid completely collapses is if operating costs require what is in the lenders' view substantial increases in cash just to keep going.