Q: Why the big drop with TSAT today?
5i Research Answer:
Creditors of TSAT have sued the company, claiming a transfer of assets has reduced their asset coverage and collateral backing the company's bonds and loans. The creditors want the transfer of the Lightspeed unit to an indirect subsidiary reversed. TSAT says the lawsuit is without merit, and it followed all proper procedures in the transfer. The company has about $1.3B in debt due this December, so creditors are seeking as much protection as they can in case re-financing becomes difficult. This could get ugly, but the stock decline likely reflects the situation fairly well.