WARNING! Financial Review follows. :-). (I know lots of people on the thread think this is trivial, but. . .)
The great thing about SI, is that you can think aloud and if your thinking is off someone will correct you. Your comment made me go back and look at the numbers, and I'll leave them the way I stated them originally. There are potentially 103.3 million shares of Globalstar, Limited (GSTRF aka GTL) common stock outstanding.
The question is potential dilution of our interest in the limited partnership, either by GTL owning less of the limited partnership, or there being more shares outstanding of the public company.
It appears from my reading that the GTL (GSTRF) shareholders are partially made whole in the financing, but not quite. Previously 82 MM shares of GTL owned 34.8% of the 58.2 MM shares outstanding of the Limited Partnership. But, GTL also had some warrants to buy additional interest in the limited partnership. In March '98, the number stood at 3.3 MM LP interests. So in reality GSTRF was in line to own 38 percent of the LP shares (assuming they would be newly issued).
61.5 MM shares * 0.38 /82.0 MM = .285 shares of LP owned per share of GTL.
(By the way, the 4x multiple appears to come from 58.2MM * 34.8% / 82MM = .247)
Assuming conversion of all shares, both of the public company and the RPPI preferred shares owned by GTL, 103.3 MM shares of GTL own 41% of
64.5 MM shares of the limited partnership. 64.5MM * .41 / 103.3MM = .256 LP share per GTL share.
There is some noise in this, because I haven't gone back to look at how many warrants to purchase share interests in the limited partnership were owned by GTL on 12/31. There were some, apparently, because on 3/31/98 there were 3.3 MM outstanding, which is what I assumed for 12/31.
In any case, my conclusion is that we have been diluted about 10% by the financing.
By the way, I do find it helpful to review the quarterlies, and not just rely on the 10K. Here are the relevant 10Q passages, if anyone is interested:
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Due to GTL's losses for the three months ended March 31, 1999 and 1998, diluted
weighted average common shares outstanding excludes the weighted average effect
of the assumed conversion, prior to actual conversion in April 1998, of GTL's
Convertible Preferred Equivalent Obligations into 20.1 million common shares for
the quarter ended March 31, 1998, the assumed conversion of GTL's 8% convertible
redeemable preferred stock into 15.1 million common shares for the quarter ended
March 31, 1999 and the assumed exercise of outstanding options and warrants into
6.2 million and 5.7 million common shares for the quarters ended March 31, 1999
and 1998, respectively, as their effect would have been anti-dilutive.
Accordingly, basic and diluted weighted average shares outstanding are based on
the net loss applicable to common shareholders' and the weighted average common
shares outstanding during the three months ended March 31, 1999 and 1998.
On January 21, 1999, Globalstar sold to GTL 7 million units (face amount of
$50 per unit) of 8% Redeemable Preferred Partnership Interests (the "8% RPPIs"),
in connection with GTL's offering of 7 million shares (face amount of $50 per
share) of 8% Convertible Redeemable Preferred Stock due 2011 (the "Preferred
Stock"). The Preferred Stock is convertible into shares of GTL common stock at a
conversion price of $23.2563 per share. Loral purchased 3 million shares or $150
million face amount of the $350 million of the Preferred Stock offered, to
maintain its ownership percentage. Dividends on the 8% RPPIs and the Preferred
Stock accrue at 8% per annum and are payable quarterly. Globalstar is using the
funds for the construction and deployment of the Globalstar System.
Globalstar follows Statement of Financial Accounting Standards No. 128,
Earnings per Share ("SFAS 128") in presenting basic and diluted earnings per
interest. Due to Globalstar's net losses for the three months ended March 31,
1999 and 1998, diluted weighted average ordinary partnership interests
outstanding excludes the weighted average effect of the assumed conversion,
prior to actual conversion in April 1998, of the 6 1/2% redeemable preferred
partnership interests into 4.8 million ordinary partnership interests for the
quarter ended March 31, 1998, the assumed conversion of the 8% redeemable
preferred partnership interests into 3.8 million ordinary partnership interests
for the quarter ended March 31, 1999, and the assumed issuance of ordinary
partnership interests upon exercise of GTL's outstanding options and warrants
into 2.5 million and 3.3 million ordinary partnership interests for the quarters
ended March 31, 1999 and 1998, respectively, as their effect would have been
anti-dilutive. Accordingly, basic and diluted weighted
average ordinary partnership interests outstanding are based on net loss
applicable to ordinary partnership interests and the weighted average ordinary
partnership interests outstanding for the three months ended March 31, 1999 and
1998. |
