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To: Cooters who wrote (88173)	11/23/2000 10:57:58 PM
From: Jon Koplik	Respond to of 152472

My Globalstar post (re : G* debt, Loral controlling old B of A loan, etc.) Message 14872453 SI: StockTalk: Communications : Globalstar Telecommunications Limited GSTRF To: pcstel who wrote (19476) From: Jon Koplik Nov 23, 2000 10:51 PM Respond to Post # 19477 of 19477 Profound thoughts (?) re : G* debt, Loral controlling old B of A loan, etc. Every time I used to hear that Globalstar had $1.9 billion (or is it $2.9 billion ?) of debt outstanding, I felt like correcting the person making the statement. Yes, there is X amount ("face value") of G* debt, but -- since the debt is currently trading at 30 cents on the dollar (then 20 cents on the dollar) (now, about 11 cents on the dollar) ... This X billion dollars of debt could be "extinguished" at a cost of only 0.11 times X. (Which is not really that large of a number). (I am aware that if a buyer begins a systematic buying program, attempting to buy every single bond out there ... the price of the bonds will increase; but keep reading anyway ...) There are actually two "juicy" angles on how wonderful it is to extinguish debt (that is re-purchased for less than 100 cents on the dollar) : 1. The corporation gets to stop paying the interest payments. 2. The corporation has completed what I call a "P & S" (purchase and sale) successfully. They sold the bonds at (roughly) 100 cents on the dollar, and re-purchased then at 11 or 12 cents on the dollar. This is REAL money, not some wacko accounting trick. (It is so real, that taxes are due, I believe). When Globalstar was sitting a few months ago with $500 million (was it $600 million ?) of cold, hard cash in their hands, I kept thinking : Geez, if Globalstar really thought they could "snare" a meaningful quantity, they could just go in there and buy up s**loads of G debt, before the market got wise to their "doings," and then announce : Hey douchebags (Wall Street "professionals"), you know that fixed obligation of Y dollars that everyone knows G* is stuck paying each six months ... Well, it is now a much lower number, because we extinguished a whole bunch of debt at less than 15 cents on the dollar (while no one was looking !). (Speaking of "while no one was looking" -- you know who Kirk Kirkorian used to buy up his HUGE position in Chrysler (before anyone realized what he was doing) (when it was very cheap) ? -- Bear Stearns (Globalstar's current investment banker, I believe)). Okay -- so, if this is (was) potentially such an interesting idea, how come it never happened ? Well, my guess is : there is this little sticking point called "loan covenants." Bank of America wants to protect its interests, and does not want borrowers to start going off and doing "financial engineering" (on Wall Street), but -- just continue "doing" their "real" line of business. Guess who is (I believe) now TOTALLY out of the picture ? Bank of America. Guess who is in the position to "breathe down the neck" (or NOT breathe down the neck) of Globalstar ? Loral. Who owns zillions of shares of Loral ? Bernie Schwartz. (I think I will stop with these stupid irritating questions). Point is ... Globalstar may now be free to extinguish the debt. Maybe they have already started. (I noticed that TradeBonds.com tradebonds.com quotes on G* debt have been BLANK for the past few days. This is the first time this has happened since at least June 2000). Jon. P.S. By the way, Loral probably bought that $500 million dollar loan from B of A for significantly less than $500 million, too ! P.P.S. Are people out there really going to continue to say how dumb Bernie Schwartz is ? And, how they wish he would resign ? He is one incredibly smart guy, in my opinion.