No more cash-pay debt? What are the options for additional capital?
The more I investigate and think about this, I'm not sure that the existing lenders will allow IRDM to add any additional cash-interest-paying debt to the capital structure (they don't want cash leaking out to anyone other than themselves). This would mean that the entire capital raise would need to be done via equity or equity-equivalents (e.g. warrants, convertible preferred with PIK interest). All just speculation on my part, but I could definitely see a PIK-preferred being a central part of the new capital. On one level such securities are "exotic" enough to confuse retail holders (i.e. make them THINK they aren't being directly diluted), while at the same time can provide sweetheart economics to institutional buyers (which is what it would likely take to get them involved in this challenged capital structure). Depending upon the rate of the PIK ("payment in kind") interest accrual, such securities can be downright awful for common equity holders--basically acting as a slow motion "cram down" dilution. In any event, I ultimately have no idea how they are going to bring the new capital onto the balance sheet, I simply know that they desperately need to do it, and it is hard to conceive of a path that is not particularly bad for existing shareholders. Good luck.
Your preferred stock idea sounds good. No stockholder dilution and dividends do not affect the P/L. Of course, acquisition is the best happening for long stockholders. While this is always a long shot, the Malaysian situation and the latest Seeking Alpha article suggesting that Facebook and Google might be looking at Satellite Communication capability certainly doesn't hurt.
LOL. The notion that preferred stock is not stockholder dilution is laughable, scary and irresponsible. If you really believe that you should hand your capital over to a trusted financial adviser before you hurt yourself. If you are for some reason disingenuously trying to pump the stock at others' expense, that is simply evil.
Also, it is quite clear that what Facebook and Google have in mind for "low cost" drone, balloon (and maybe even satellite!) data provision to currently uncovered populations has nothing to do with Iridium. First, Iridium is not "low cost," second FB & GOOG don't need/want to provide data to the oceans or poles (there is no population there) so if they were to incorporate satellite into their plans it would be via a service like ViaSat which would provide a fixed orbit satellite with much higher bandwidth capacity than Iridium's solution over Africa (where there is a significant population without cheap data coverage). And, to connect the dots for you, that would be really bad news for Iridium--a further increase in competition and a further shrinkage of its addressable market.
Anyway, I'm thinking perhaps your post was an April Fools joke, in which case--good one!
in a perfect world, NEXT is launched without any additional equity...but its not perfect...in the next best world, the company is able to operate within new covenants and the market will not be worried about covenant violations going forward...as an investor who ignores volatility and is more focused on the risk of "capital destruction", I would much prefer to be diluted MORE today in exchange for a stronger balance sheet, than have to live with the potential of a capital raise AFTER the stock is weak. I think today's market action is telling you that there are enough buyers on the sidelines who want to have the capital raise behind them, and few who believe that the cap raise will be difficult. The stronger the stock remains, the more fearful the shorts need to become. After all, if you are short 3 million shares, and a key part of your thesis is that you will be able to cover in a capital raise...and then it appears that the raise will go well, then you will become LESS confident about being able to cover on the deal....so you start covering today...causing the stock to lift...and the virtuous circle begins in the positive direction, rather than the death spiral you were banking on... Oh and by the way, if you thought that there was risk to Aireon being successful, the missing Malaysian airliner has put the FAA into high gear to sign on...
Not so sure on the Aireon/FAA matter - I hear that authorities want something now and NEXT won't have full-time coverage for another three years (and ADS-B Out isn't mandated until 2020). I understand that the easiest thing to do is simply require over-water airliners subscribe to an existing satellite safety service and hard wire the current transponder to not be on a pilot-accessible circuit. The former can be mandated immediately and the latter can be done in a maintenance visit.
How much dilution are you expecting? If you have been listening to management then you should be expecting zero. They have always claimed to be fully funded. They have no credibility. Doesn't a $225 million shelf seem like a lot?
As for Aerion, there is no question that the media coverage around the Malaysian Airlines disaster has been great for IRDM's stock price, but ultimately it is a sideshow to the broader fundamentals which are quite bleak: stagnant/limited market size and declining ARPUs PLUS increased competition from Globalstar (which finally is up and running), not to mention balloons and drones from GOOG and FB.