Now that I have returned home from the conference and had time to actually digest the announcement, couple of thoughts:
1. JV conditions that Beam are challenging have been established by the current BOD (psst: 'made the bed - now lie in it'...?), the JV terms were profitable to only one side (RP), as was understood almost from the the very start (as was evident from the lack of disclosure/secrecy of the JV performance for years).
a. Who is going to accept responsibility for the mistakes of setting up unfavorable JV terms for BCC
b. Who is going to accept responsibility for the financial impact of the unfavorable JV to the shareholder/investor funds (and the upcoming litigation/arbitration process, that is costly)
2. The prefered outcomes that have been presented to the shareholders, whilst positive, are not accounting for the Roadpost's needs/desires.
a. How achievable are those outcomes without major commercial dispute cost to BCC (if the communications are alredy deteriorated and broken down, how likely is that the RP just going to 'handover' the reins to Zoleo or give BCC a massive payout based on realistic valuation model? (Hint: Extremely unlikely).
b. How long will it take to achieve the presented outcomes? RP can drag it out to indefinitum whilst profiting from the established framework of existing JV structure whilst BCC fights for more favorable conditions.
3. BCC may suffer reputational damage arising from this arbitration process, Satellite Comms is a niche industry with limited parties, this may not reflect well on the company and is not value-add for any future commercial negotiations.
a. Will this arbitration process and the associated uncertainty taint the 'Due Diligence' process for the Defence contracts?
b. Will this arbitration process (if it is dragged out for years) significantly affect profitability of BCC (due to ongoing JV commitments + litigation/arbitration costs)
c. Will this arbitration process affect Irridium and BCC's relationship as the projected Zoleo growth and associated radio revenue will go in majro decline as the growth predictions will not be satisfied?
4. How will Zoleo growth be supported in either of the presented outcomes if the distribution and support networks in NA are currently supported by RP and the fabrication of the devices is supported by BCC?
a. There is no amicable/realistic way to achieve either of the presented "Prefered Outcomes", in either of scenarios the JV party that becomes the full owner of the JV will be missing a key part of the JV functionality (i.e. RP will not find another fabricator of Zoleo devices, nor will BCC renegotiate a full-fledged support and distribution network for Zoleo in NA, specifically around support of services to 90k+ existing subs)
b. It is simply unthinkable and misleading to state that the arbitration will not have material effect on BCC or growth prospects of Zoleo. This JV is about to become very dysfunctional, growth will stall, the valuation of the JV will be drastically reduced (if the process is drawn out over the coming years).
This is not a winning announcement, whoever thinks that it is - is delusional.
RP is a powerful and rich organization that will crush BCC to dust given the opportunity, and the spoils of that process will be the remaining JV %. How RP will achieve that is yet not known, but make no mistake RP will fight back. RP can just funnel its profits from the JV into the arbitration and appeals processes, remember that RP is not running their part of JV at a loss, contrary to BCC. RP whilst not publicly listed would have a MC of X10 of BCC and can drain and outlast BCC and its investors available cash.
BCC barely have 4M in the bank, have a looming upcoming CAPEX expenditure for the new devices and likely have locked a lot of capital to secure production capacity parts/components for the Zoleos that they are about to...not be able to sell. This relationship breakdown will cost very dearly to BCC and that is really unfortunate.
To add to the above, any upcoming positive SP catalysts will be overshadowed by the ongoing arbitration, Market is already pricing BCC to be bankrupt/outdated/noncompetitive so any positive news will be promptly ignored by the Market (until completion of arbitration).
The above sounds negative, however I believe it is simply realistic as BCC do not have 'many wins on the board' to convince me that this arbitration will be resolved in BCC's favor.
(20min delay)