The ground spare satellite (secured by a ~$100M PMCF) could be sold separately, but there is no indication that this is additional to the bid range that has been published, and every likelihood that $1.4B high end of the range incorporates paying off the PMCF and taking ownership of the ground spare. If another bidder wanted to pay more than $100M for the ground spare then that could provide some incremental value to the TSN estate. The ground spare was appraised for $200M last summer, but there is no indication that this could be realized in a sale to a third party, especially given the costs associated with repurposing the satellite for some alternative use.

One more question….what about the valuation of Terrestar Satellites? Will that value not contribute to the TSC’s debt? How much do you think both the satellites combines are valued at?

Total valuation – 1.4 B (2MHz specvtrum) + 250M (1.4 GHz spectrum) + (~300 million for 2 satellites?) .

For the above case, the debt for both TSN and TSC should be convered…Thoughts?

Harbinger has the option to buy that spectrum for $250M minus credit for lease payments to date and pay part of this sum in TSC preferred shares at face value. The FCC sold this spectrum in 2007 for $123.6M. Neither of these valuations would come close to paying off the ~$500M of TSC debts and preferred stock.

Thus by my calculations you would need the TSN auction (plus the sale of TSC’s 1.4GHz spectrum assets) to result in total proceeds approaching $2B before the common equity holders in TSC saw any return on their investment.

Unfortunately a $1.2B-$1.4B deal for TSN (unless it went much higher during a subsequent auction) would almost certainly leave the TSC common equity holders with nothing. If the other first lien holders are being taken out at full value for cash (as would be implied by a stalking horse bid from DISH at this level), then there is not much incentive for them to bid more. Whether MetroPCS is prepared to bid more is unclear, but its worth noting that it was only with the support of Harbinger and Solus that they were able to make a $1.475B bid for DBSD back in March, and the contemplated total bid for DBSD and TerreStar combined at that time was $2.6B.

The alternative stalking horse bidder is unclear, but most observers have assumed that DISH is interested, even though Echostar has said previously that it does not intend to bid.

It is possible that there could be further bids in the auction next week, but it is equally possible that there might be no further challenge to the successful stalking horse bidder.