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Technology Stocks : GX Investors Thread -- Ignore unavailable to you. Want to Upgrade?

To: devonian who wrote (538)	2/14/2002 12:57:56 AM
From: Bonzo	Respond to of 586

I do understand where shareholders reside in the pecking order - near the bottom. I also agree that bondholders should come out ahead of Common and Preferred. What I don't agree with is the means by which the company has decided to restructure the company. They could have done a pre-emptive filing (ala Covad) and/or restructured debt similar to the dutch auction LVLT successfully conducted while maintaining some equity value for current shareholders. The debt holders get more than common and preferred but no one is completely washed out. There are also salable and sizeable assets. I could never agree with a restructuring that completely wipes out old shareholders (and magically creates new ones) unless there is a Chapter 7 filing. With all the stock that GX issued in the past (Preferred, Convertible, Common), would Warrants be too much to offer existing shareholders? I wouldn't call that significant. Not even a bone from this shameless management team

To: devonian who wrote (538)	2/14/2002 2:34:02 AM
From: Maurice Winn	Respond to of 586

<Now, if it took some smoothing over with the current equity holders to get something done quickly, fine... take a tiny piece for long term upside for your near term cooperation. It's a fair trade for getting the show on the road quickly and begin the rehab process. In a year and a half, Tycom's got a competing network and we REALLY don't want to argue the point until then. > Good point. There's no time to waste. There is $20 billion in assets going rusty under the oceans. Globalstar wasted 2 years and STILL hasn't got things going; they just carried on downhill instead of recognizing a lack of sales success and doing something serious and urgent about it [namely slashing prices to generate huge sales quickly to get business and shut out competitors]. Globalstar could have shut out Iridium, ICO, Ellipso and the rest of the competition and gained millions of customers by acting quickly. A couple of days ago, Iridium launched half a dozen satellites to maintain their constellation. That should never have happened because Globalstar should have shut them out by rapid development of their business. Global Crossing has been dithering too. The assets are a great development for the early 21st century and it's started in a mess. The creditors are probably happy to get quick action while there's still money in the bank and time to get things going. Hutchison's offer is a bargain for Hutchison Whampoa and Singapore Technologies Telemedia and dismaying to creditors and shareholders of Global Crossing, but if it's the best offer going, Global Crossing creditors might as well take it unless some other idea would fly. But time's wasting! Competitors aren't asleep. Mqurice

To: devonian who wrote (538)	2/14/2002 10:22:09 AM
From: CYBERKEN	Respond to of 586

<<Without debt financing, most shareholders wouldn't get the higher long term returns they do.>> That's true, without a doubt, and any current debt in distressed companies shouldn't be devalued by changing the rules retroactively. For the coming debate on general reforms-which is compelled by the new circumstance that 80% of voters today are invested in the equity markets-a priority will be placed on the prevention of management ignoring their fiduciary duties and endangering their shareholders' capital through excessive junk-level financing. In a review of Chapter 11 rules, a safety net for common equity holders would accomplish a public policy need by forcing into the equation the real possibilities of junk holders being wiped out while equity holders are allowed to suffer severe losses and still survive. In general, anything-from taxes to onerous regulation-that reduces the probability of capital formation is an economic negative. But, like all such economic arguments, the assumption that executives working diligently to protect equity holders' capital has to be assumed. Enron, GX, and several other recent bankruptcy filings-many of dubious necessity-have brought the deficiency of executive integrity into a heavy public spotlight. There is thus a very strong possibility that junk bond investors will be drafted in this new war against executive terrorism. For better or worse, that seems to be a direction in which we will now move. The debate should be interesting...