From the Friday Release: Following these exchanges, Iridium has 8,979,434 outstanding $7.00 warrants, including 632,726 that are included in the Units.
"The preferred stock offering we announced today satisfies our capital raise obligation under our recent credit facility amendment and is part of our fully funded plan for the construction of our next generation satellite constellation, Iridium NEXT," said Matt Desch, chief executive officer, Iridium. "With that obligation satisfied, the warrant proceeds are no longer required, and we can undertake the planned warrant exchange tender offer."
Yes, very unimpressive. Here is Mr. Market's perspective - who never lies. Let's do some isolated thinking here. Iridium provided some shares (warrants) that pay a 7% dividend on approximately $100M payable each quarter. We could have this wrong, but simple numbers are the best numbers. So, here is Mr Market's take as seen with shares traded: Iridium is taking their slim profit and providing to some folks that want to buy their stock on the closed flea market. Sorry for the colorful language, but could not resist. We should recall Raymond James used to pump up hype for other industries years ago, and look what happened. Not a good story. Anyways, back to Iridium. If Iridium has this desperate need for capital to invest in their next constellation of satellites, what will they do with the shortage of cash besides provide for all their expensive staff, overhead and IR&D? Cut dividend checks every quarter? Sorry Mr Iridium, we are not sold on this kind of investment scheme. Sounds way to risky and back to your old ways of laundering money at the expense of a bond holder. We believe that Motorola had to foot a bill of $800M or more after a settlement of default on bonds several years ago when Iridium issued instruments of this nature. Bottom line, some advice to shareholders and investors - run away and don't look back. Some advice to management - cut costs in order to pay your hefty commitments with this next constellation. Lord knows you will have to compete heavily with the continued roll out of LTE, Ka Satcom, and something else in the next few years (very cheap data plans will also be here in an few years via cellular). Oh, forgot the short sellers. They can actually make some money here. And one more thing. Why don't we see articles from investment columns that cover the negative risk or downside considerations mentioned? hmmm, wonder why? In hindsight for the investment firms, you should be aware that Mr Market never lies.