How can Falcone make this statement and a potential bk judge give the assets away...
In an email exchange with a Reuters reporter, Falcone suggested that even a bankrupt TerreStar might be worth between $1.5 and $2 billion because of the value of its spectrum license. Using those rough figures, Falcone would appear to be valuing LightSquared at a minimum of between $3 billion and $5 billion based solely on the size of its transmission spectrum -- which is twice that of TerreStar's.
When asked whether a $3 billion to $5 billion valuation figure for LightSquared based on it spectrum assets is appropriate, Falcone responded in an email: "I've been offered more but u r getting warm." He didn't elaborate but in another email he implored: "Do the math."
Yet a $2 billion spectrum valuation for TerreStar would be quite rich. That is twice the value of the outstanding debt for a company with a market-capitalization under $50 million.
OK, TSTR should be 1.5 bil in bk.
Let's assume you are creditor of TSTR. TSTR ows you 200 mil $. TSTR goes bk, all assets are sold for more than 1 bil, so you get all your money back. Best case for you.
Now Blackstone comes to you these days and says: Please waive 20% of your credit, otherwise TSTR goes BK. What would you say?
In case of BK, which seems imminent, preferred holders lose, shareholders lose, and creditors most likely lose 10-20% once their equity in assets converts into common, and the company re-lists itself.
The question that noone asked before, and that Falcone hints is: "There may be a buyer(s) out there!"
If there is one, what scenario is better for a buyer? I don't think BK plays for them.
Time is money!!!
How does a buyout pan out for creditors?
They can now get 100%, could be some right away, some restructured, later. Preferred get their money back, shares bought at $6. Exit for eveyone.
Falcone, and others, don't like losing, even if that is smaller portion of their holdings, like equity in TSTR.
Why would anyone buy at this point?
Pay a small price to be first in the market, a premium of about 50% over the asset value puts the price tag between 1.5-2B, and you get it all.
Company is now private, with debt close to 0.
Now, a buyer can go IPO after a year, this time with a company that has a commercial MSS application rolled out. And he can also have a prescribed IPO interest in all creditors that are in love with TSTR, an incentive for them to sell, yet stay in the game.
Now a buyer can get it's money back!! Maybe some, maybe more then some.
Farrar trumpets BK, and many (PCSTEL) follow that trumpet like rats, because it seems obvious looking at what happened to ICO (DBSD).
But hey, with Falcon you never know what comes around a corner.
All you need to think about is:"Who wants to spend $2B on TSTR technology?"
Buyout works for Falcone big time at this stage, because he is stretched out, and he needs some float now. Of course he is not going to say that. Buyer will still have to continue paying Falcon for using SkyTerra technology embeded in TSTR solution. He's got plenty of spectrum in other pockets to pursue his dream.
I think he is playing it cool, because for him BK is also an acceptable exit, a bit on a losing end, but more then anything hurts cashflow and timeline.
Time not on his side in BK, and time is money!
At this stage I think he would love to sell TSTR more then anything else.
It is because you did not read and quote everything Falcone said.
He also said that he was offered more then (3-5B) for LS.
He is free to say whatever he wants, and quote or ask whatever monies he wants for anything he owns.
He can also use any valuation method he wants to.
That is what you would do if you were a seller.
The question is, are there any buyers out there at that price?
my $.02worth i beleave there wood be a lawsuit for misleeding stock holders .leaving TERR for stock holders to buy knowing the money was going to star terra .were is the money that (on paper) starterra paid terrastar ? starterra is nothing without a sat so why would H.buy starterra without knowingly, the intent to misslead and defraud stockholders .rember starterra was taken off the exchange