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

To: djane who wrote (6458)	8/12/1999 7:42:00 PM
From: djane	Read Replies (2) \| Respond to of 29987

Reuters. Stocks Fall In Satellite Phone Companies Thursday August 12 7:14 PM ET By Ilaina Jonas NEW YORK (Reuters) - Stocks of two of the three leading satellite telephone companies plummeted Thursday under the weight of major financing woes that cloud their future. Shares of Iridium World Communications LLC dropped more than 28 percent, or 1-11/16, to bottom out at an all-time low of 4-1/4 on the day after the struggling operator of a $5 billion satellite network defaulted on $1.5 billion in loans. The plunge landed the stock -- which 15 months ago was trading at a lofty 72-3/8 -- as the No. 1 percentage loser on the Nasdaq market Thursday. Meanwhile, shares of archrival London-based ICO Global Communications Ltd. fell 11/16 to 5-5/16, or 11.5 percent, on after it said it would consider modifying its financing plan with investors after funding commitments fell short of its $600 million threshold. Late Wednesday Washington, D.C.-based Iridium said it had defaulted on a $800 million loan and another $750 million loan after it failed to meet customer and revenue growth targets required under the larger of the two loans. Iridium, London-based ICO and Globalstar Telecommunications Ltd (Nasdaq:GSTRF - news)., an international group led by Loral Space & Communications Ltd (NYSE:LOR - news)., are scrambling to launch hand-held satellite phone services to allow customers to stay in touch any time from anyplace on the globe. Shares of Globalstar closed down 1/4 to 28. Iridium, the only company to launch service so far, has repeatedly stumbled, and its principal backer, telecommunications equipment maker Motorola Inc. (NYSE:MOT - news), has raised the possibility that it may have to liquidate. Shares of Motorola, which founded the company, is one of its loan guarantors and holds about 18 percent of its stock, fell 5-1/4, or more than 5 percent, to close at 87-3/4. ``It's difficult to split the market,' Yankee Group market analyst Phillip Redman said. ``Split it three or four ways is really hard.' Redman said that Iridium's service needs to be priced right to attract customers. About six weeks ago, the company lowered its North American prices to as low as $1.59 per minute and as low as $2.99 per minute for international satellite calls. It also announced a package price of $1,495 for its phone, battery, potable antenna and antenna adapter. Nevertheless, ``It's still very expensive,' Redman said. Iridium's default has the potential to lead to bankruptcy. Analysts have said they expect the banks to wait to see the outcome of a restructuring plan the company is discussing before they decide on a coarse of action. ``At this time, banks may feel that Iridium's future is significantly enhanced by a restructuring that includes a significant Motorola cash infusion,' C.E. Unterberg analyst William Kidd wrote in a research report. But Kidd warned an Iridium bankruptcy ``may be awfully close.' Soundview Technology Group analyst Tim O'Neil said he believes Motorola will step in with a cash infusion and larger equity stake. Meanwhile, Iridium faces another deadline Aug. 15, when it is scheduled to meet a $90 million interest payment on its $1.45 billion in bonds. The payment was originally due July 15, but Iridium exercised a 30-day grace period. Earlier in the week, analysts said the reorganization may call for Iridium's bondholders to swap half to two-thirds of their securities for new debt that is convertible into Iridium common stock. Iridium bonds Thursday were trading at 19 cents on the dollar. ICO, meanwhile, said its investors now were looking at revised financing, which would mean a lower minimum investment threshold and substantial deferrals of payments due in 1999 to suppliers. It said it faced substantial uncertainties as to whether the revised financing could be completed. ICO, which is building a $4.7 billion satellite phone network, needs more than another $1 billion to launch its service by the fourth quarter of 2000. It has received about $3.1 billion from investors to date. Copyright ¸ 1996-1999 Reuters Limited.