It seems that these Accel-KKR people are going to be the lead actors but I'd be surprised if QUALCOMM doesn't get a big stake in Globalstar too. QUALCOMM was considering taking over [a large chunk of it] but backed out, but I suppose temporarily. Blackstone, QUALCOMM, Accel-KKR Telecom seem to be the main co-conspirators. Arun Sarin is going to be the boss [I suppose QUALCOMM doesn't want to actually run the show - just have a piece of the action].
Ira Goldberg will act as the 'restructuring' officer for Globalstar Telecommunications Limited. Bernie and sidekicks are out, which removes the Loral conflict of interest.
So, here's the deal I expect:
Ira sells Accel-KKR, QUALCOMM and Blackstone a swag of GSTRF stock [3 billion to be newly-printed which means a LOT of dilution for GSTRF shareholders] for $500 million. GlobalstarLP partners and creditors agree to sell their interests to Globalstar Telecommunications Limited for a pittance, or more likely are offered shares in lieu of their GLP interests. Creditors don't get money, they get newly-printed shares in Globalstar Telecommunications Limited.
Globalstar Telecommunications Limited signs new deals with service providers and agrees to buy a few gateways where service providers have lost interest.
Arun Sarin will fine-tune the pricing and away they'll go for another couple of years. Arun, [being ex AirTouch], will NOT have heard of nor be interested in WackyWireless, or selling a lot of minutes in a short time to fill the system. He will want to do lunch with big corporate customers and run an empty system with not a lot of profit [although very good compared with the existing situation]. Globalstar will remain an insignificant niche product. There won't be a second constellation until 2010 and Globalstar will lumber along with poor coverage, high prices per minute, old phone technology and no excitement.
That is my guess. However, I know almost nothing about him and perhaps they will be real go-getters, imbued with ideas of consumer surplus, internet-auction handset marketing, know about market-clearing, have heard of price-elasticity, have arranged with QUALCOMM to use Motorola's pricing patent in Globalstar to optimise usage and profits, etc... Don't hold your breath.
The 'fine-tuning' comment shows what they are thinking = grab some assets cheaply and leave it at that, carrying on with the "normal way of doing things around here", which is the old Telecoms monopoly lethargy and lack of imagination.
L M Ericsson's handsets claim and the class-action lawsuits are annoying, so unless there is some resolution there, it might be better to simply buy the assets in a shares-for-debt deal and form a new company. But continuing with the existing structure is probably easiest if all parties can be brought [kicking, screaming and whining] to agreement. I will do the whining if somebody else does the screaming. Anyone want the kicking job?
Globalstar Telecommunications Ltd is Bermudan, so that's nice in a lot of ways. We should add a 20:1 reverse share split to bring the number of shares into a manageable format [3,000,000,000 is too many and 150,000,000 saves pixels and ink]. That would maintain a Nasdaq listing at a reasonable share price.
Hmmm, I suspect 3 billion new shares is too light for the $500 million new cash and $3bn in debt. Maybe 6 billion would swing it. With a 20:1 reverse split, that would mean 300 million shares, with $600 million in the bank, a debt-free constellation [replacement cost $3 billion], SOCC and GOCC, 50,000 subscribers, another 50,000 handsets in a warehouse, a few gateways to be sold and a big demand for phones and service [at the right, low, [like 20c per minute], price].
The share price should be about, oh, let's see, hmmm, $10-$20 or so, which = 50c-$1 [with a 20:1 reverse split] for existing GSTRF shares - that's an improvement from 30c. But maybe they'll just buy the assets from creditors or do a debt/equity swap and shareholders will get zilch.
There's one WAG theory!
Mqurice |
