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

To: BobRealEstate who wrote (16365)	8/29/2000 10:57:30 PM
From: Maurice Winn	Read Replies (1) \| Respond to of 29987

Globalstar LP owns: 2 x SOCC 2 x GOCC 52 satellites in orbit 4 satellites on the ground Royalty rights to handset sales [I don't know how that works] Gateways which are incomplete or still in storage Contracts with various companies [exclusivity agreements linked to gateway ownership] Some gateways [or interest in them] where they own or partly own the service provider. Debtors list Cash in the bank Bits and pieces It's a going concern, which will function for another 10 years with negligible costs [other than salaries, maybe a rocket to launch the 4 spares]. Without debt, the annual operating cost is so low that a new operator could undercut cellphones and develop a huge market as fast as handset production could be accelerated. The bond holders could put this lot on the block and sell it as a going concern for about $30 billion. They would get all their money back. The new owner would be NTT, China Telecom, Sprint, QUALCOMM or some Johny-come-lately who would make Vodafone rue the day they fluffed the launch! This will NOT go the way of Iridium. Anyone who thinks so needs a brain scan. The satellites will NOT re-enter the atmosphere at least until 2010 if not later for most of them. Service to Globalstar subscribers will NOT be interrupted in the event of bankruptcy and new owners, except that they might have to contact the new owners to open an account and get reconnected - that assumes an absolute worst case shambles where Vodafone or other service provider refuses to co-operate with the new owners. Bond holders are wacky to sell their bonds so cheaply. But, as Deeber shows us, there's one born every minute. Yes, there is a risk for GSTRF shareholders - we might get nothing back in a bankruptcy. But I'd laugh and not really be surprised if we got more back than the current share price. [Actually, I'd be disappointed at such a compulsory acquisition] $3 billion [current market capitalisation] for the company with another $2 billion debt is not really too much to pay for a highly-performing constellation with heaps of spectrum and available minutes right now = 10 billion per year [and maybe 20 billion if Q! does HDR and 1x-EV type tricks at the gateways] with phones that work really well and a technology upgrade pathway with no limits. I heard that some companies bid $100 billion just for spectrum in a couple of countries, never mind infrastructure and delays until they roll out their WWeb services in two or three [or more] years. Mqurice

To: BobRealEstate who wrote (16365)	8/29/2000 11:31:21 PM
From: Michaelth1	Read Replies (2) \| Respond to of 29987

Bob: I don't think that BK will work differently if G's bonds are secured or unsecured. Let's assume that G's bonds are unsecured, i.e., there is no collateral for them. Here's how the BK would probably work (it would work the same if G's bonds are secured by substantially all of the assets of G, which is probably the case but I don't know): Even though G's bondholders are unsecured, they are still debtholders. As debtholders, they are entitled to foreclose on their debt by selling off assets of the company unless someone else has a security interest in the assets of G (most likely Loral and the Q as part of their vendor financing received a priority lien on at least the assets that they are financing). The fact that those assets weren't pledged as security doesn't matter. A debtor doesn't need to be secured to collect a debt (is a credit card company secured?). What does this mean for G* in reality? G* bondholders and bank debtholders (assuming that neither has priority over the other) each have a right to the assets of G* to pay off the debt owed to them. Since there are no assets of G* that are worth auctioning off individually, the only asset of value is the business itself (and perhaps the licenses, but I's BK indicated otherwise). So, the debtholders--who in essence control the company via veto power--will force the company to sell G to the highest bidder. The debtholders will take the vast majority of any sales price, which would likely include cash ($.20 on the dollar of debt?) plus an equity portion of post-BK G* (which would be virtually debt-free). A few pennies per share (literally) will be tossed the way of the common shareholders (and L.P. equity holders). In short, I don't think it's worth wasting your time determining if the bondholders have collateral or not. Even if they are unsecured, the bondholders (along with bank debtholders) will have veto power over the company's actions in BK. Anyone who doesn't think the above scenario isn't feasible is, imo, kidding themselves. That's why the bonds are trading at $.30. Bondholders, on the whole, are much better at determining the value of a company, so a bond price usually isn't subject to wild swings in value like a stock (this, imo, is largely due to the lack of a substantial retail presence in the corporate bond market). Debtholders are very risk-adverse, so foreclosing and taking what they can get--even though the business may succeed and, as a result, repay its debt in full--is sometimes chosen even though equity holders can make an argument for the company's ultimate success (don't forget, the bondholders usually get an equity position in the new company, so they will want it to succeed) As Maurice stated, the installed GWs are owned by the SPs (although payment for the GWs is quite slow--perhaps a foreshadowing by the SPs, the holding off paying a soon-to-be-BK entity). Therefore, the purchaser of G* in BK would not own the GWs. Obviously, G* can't operate without the SPs operating the GWs. Clear cooperation would be required by any purchase and the GW owners. In other words, the purchaser of G* probably wouldn't be a direct competitor of the SPs. That rules out most of the potential buyers of G* besides the SPs themselves or some deep-pocketed investor (GE, MSFT, Gates, McCaw, etc.). I say this in light of my prior post in which I indicated that I didn't think (and still don't think) that BK is the likely outcome. But it is possible. You might as well know how the process "works." All imo. Corrections appreciated.