TerreStar Swoons; WSJ Says Company Nears Bankruptcy Filing
By Eric Savitz TerreStar (TSTR) shares have lost about half their value this morning after the Wall Street Journal reported that the satellite smart phone provider is considering a Chapter 11 bankruptcy filing. The story notes that TSTR, which has more than $1 billion in debt, could file within days, and noted that talks with creditors have intensified in recent weeks.
The story says the company plans to convert some debt to equity; it also said that one creditor could provide $75 million in debtor-in-possession financing to keep the company afloat.
The company, which has about 100 people, is trying to build a system to provide satellite-based mobile communications in hard-to-reach areas in North America.
OCTOBER 18, 2010.TerreStar Considers Chapter 11 Protection By MIKE SPECTOR TerreStar Corp., a mobile-communications business trying to launch a far-reaching wireless network using satellite smart phones, is preparing a possible filing for bankruptcy protection, said people familiar with the matter.
TerreStar, laboring under more than $1 billion in debt, could file for bankruptcy protection in coming days, these people said. They cautioned the filing could be delayed. A filing had been expected as early as Sunday.
The company declined to comment.
Negotiations between TerreStar and its creditors have intensified in recent weeks, the people said. The talks have focused on a "prearranged" bankruptcy filing, with TerreStar seeking court protection to pursue a restructuring plan already approved by some creditors, one of the people said.
TerreStar plans to convert some of its debt to equity in bankruptcy court, this person said. One creditor could provide TerreStar with about $75 million in debtor-in-possession financing that would keep the telecommunications firm afloat during bankruptcy proceedings, the person said.
The company could launch a new stock sale open to certain creditors to finance its bankruptcy exit, this person said.