Intelsat S.A. (fka INTEQ)

[eddy2]

There are numerous ways these deals are structured. The end results are the same. A contract is writen up where as a portion of the company is sold. The assets are put up as collateral and the bank assumes the debt. Money is not transferred to the collateral holder until the equity is sold. You then establish a three way deal. Money is released from the sales of equity too the bank and the bank then releases the funds too the collateral holder. The collateral holder then releases the assets to the equity holder keeping all proceeds up to that point for leanding the collateral.

Because administration fees are paid through revenue generated by the collateral and kept there is no administration fees to the entity until after the collateral is acquired.

By leveraging the assets in this manner the equity sold has a very high revenue component to it. This again brings lots of attraction to the stock being offered. Now remember that the service or product being produced margins shrink exponentially at the beginning of an asset sale. Because a contract was set in place for those assets the owness falls on the ones acquiring the asset to take on the depreciated assets.

Now the pricing of the offering is controlled by forward splitting the stock as well the volitility in the stock purchasing and reselling process.

How many shares can be sold is unlimited. This is if there is collateral to back the sale. How is that accomplished by deferring the depreciation of the newly purchased assets keeping otherwise tax’s that would be normally diluted by depreciation expenses on the books.

This then becomes a negative effect as speculation arises to what the liability of the capital surplus is.

As we know capital surplus and its adjoining liability can also be credit offered as a purchase or selling of a service or product or combination of both.

The line between debt and credit becomes blured. Credit that has been given without consideration too collateral is the most dangerous and riskiest form of liability. If to make a sale of a product or service that requires the offering of credit to the customer then the product or service offered falls into question.


There is the double sting to consider. This is where a company will balance the credit that is none collateralized to the debt taken on that is none collateralized. The Peter pay Paul and Paul pay Peter plan.

Now there is associated court costs but they are also passed back and forth between the parties of interest.

Theses court costs are then absorbed by the revenue generated by the sale of equity that has little trinsic value and a whole lot of intrinsic value if and only if the equity can be sold at a premium to its underling value.

A private placement will often get the results the investor wants but will often come with special trading privileges to the private placement holder.