Kyrosl:
I was hoping you would show up:
Now here is a question..
Would you consider yourself a "typical Gloablstar bond holder?"
In other words.. You understand the intrinsic value of the system as a whole operational system. Whereas, I assume, that the average bondholder bought the bonds for a more simplistic reason.. 11% interest! In other words.. A Bondholders does not buy a bond at face value, with the designs on equity in the system when it goes BK.. (They would just wait and buy the bonds before it files at a much lower price, like you did). The Original Bondholder is after the interest on the bond, and re-payment at maturity.. And these "Original bondholders" are willing to assume the risk, at the time, to receive a "better than market interest rate" on their money!
Whereas someone whom buys the bonds @ .10 cents on the dollar has considered the concept of a debt for equity swap in BK! As a matter of fact.. The risk you assume by buying the distressed bonds, is based on the fact that "you hope" of receiving a percentage of equity if the company goes BK, if not, you just receive the interest payments, and the face value on maturity.. In addition, you may consider that the ultimate value and risk/reward of such a move may be greater than buying the common stock outright? Correct? In other words... When you bought the bonds, was it in your design that an equity ownership in the system would be feasible if/when G* went BK?
By your comments, I would guess the answer is yes!! Now the question is.. Are the majority of the bonds in the hands of people/organizations like yourself, or the person/organization who bought the bonds at face value, or some value greater then 30 cents on the dollar? i don't know
My second point is that since I would state that you are not the "typical Gloablstar bond holder", but more like the "atypical"
But let's look at the person who bought the bonds @ .10 cents on the dollar who may not understand the underlying value of the system. To those typical bondholders whom bought @ .10 cents on the dollar. If LORAL stated next week that on March 31, 2000, that given current indications.. LORAL was going to call the loan, due to the covenant violation. In turn BLS stated that in the event that this chain of events were to take place. That GLP would seek BK protection on March 31, 2000.. What would the bonds be worth on the open market? Probably less than .10 cents. What would the value of the common stock be? Probably less than 2 1/4. (Maurice here is where I say this may not be the bottom. OK)
So at this point, the "typical Globalstar bondholder" sees an inevitable BK dead ahead, And there is little they could do to avoid same.. (Except buying 100,000 G* phones and start racking up MOU's 24 hours a day), In addition, they see the closest example of a system like G*, that took 14 months to complete BK, whose final outcome left the bondholders receiving little to nothing.. (I have not seen the detail of the final agreement). But since the judge told MOT they could de-orbit the LEO's, I doubt that the bondholders got much.
So the typical bondholder sees nothing but BK dead ahead and a complete loss. IMO
The question is.. Would "the typical bondholder" accept a deal where they received common stock in GSTRF in lieu of interest for a two year period.. (Irdium's BK took 14 months anyway). In addition, Gloabalstar could show them they had the ability to raise an additional 60 million in a dilutive fashion, that would enable operations for another 14 months with no revenues. And maybe the partners would guarantee another 40 million or so... So that's 2 years worth of operations.. Or, the other choice is a long cold BK process?
Bernie has attempted to make it appear that the part of the system that Globalstar LP owns has no commercial value.. No Installed Gateways owned by GLP, No Regulatory Approvals named to GLP, No contracts, Just 21,000 voice subs, a warehouse full of UT's, and some Gateways in a box.
In my opinion.. The G* bondholders as a whole, would view the 14 month Bankruptcy process Iridum took as a omen.. The Iridium bondholders appear to have gotten very little, if anything. How many of these "typical bondholders" would consider their investment a ZERO.. Or maybe at the end of 14 months, they may receive some token monetary value? Remember, Globalstar is not a complete system like Iridium was.. It's Gateways are owned by foreign corporations, and Gateway, and UT regulatory approval is owned by these same foreign corporations.
So if an outside company was to bid on the assets of Gloablstar, they would get a nice fleet of LEO satellites, that has no Gateways to connect to the terrestrial PSTN that are part of the package, (sure there are some in boxes in a warehouse somewhere, but they take 2 years to get installed, if you can get regulatory approval in the country you want to install them in). In other words.. There is no value in the part of the system that GLP owns, as a commercial asset, to be sold to the highest bidder in it's current form!
Sure you might be able to strike a deal with the current GW owners, but I doubt they will want to give the new owner any better deal than the previous.
Your view of a ownership after BK is based on a system that has IFN online, Data online, Updated software for UT's. Data Modems, etc.
What do you think Qualcomm is going to do when it becomes evident that their investment will become a write-off. The 500 million in VF is not going to be repaid? It would be a prudent business decision, and their fidiciary responsibility for Qualcomm to announce shortly after the LORAL announcement that, Qualcomm intends to cease on going development on Gloablstar..(Thier shareholders would probably demand it.. Many are not too happy with the whole G* cloud hanging over QCOM's silver cloud the way it is..) "Do you think that QCOM is going to make some statement like.. We here at QCOM plan to continue on going R&D on Globalstar even though we have lost most of our investment, and there appears no way we will be paid for our services by Gloablstar for the R&D while in the BK process.. Still, we still plan to spend our shareholders money so that those "Atypical bondholders who bought Bonds @ .10 cents will receive a great value for their investment when this system emerges from BK?? Do you really think that is going to happen?? So there goes you IFN, and maybe even you LDR data,
So now Mr. Atypical Bondholder, you have a system of LEO's with 100,000 mobile UT's, a bunch of Gateways in warehouses, no data, no IFN...
I am sure you will receive a great value for your investment dollar in Bankruptcy..
Don't be too greedy when it comes time to vote, or you may just get what you are planning on. AN EQUITY PARTNESHIP IN NOTHING!
PCSTEL |
