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March 8, 1987

EQUATORIAL COMMUNICATIONS IN VENTURE AGREEMENT WITH CONTEL ASC

By CBR Staff Writer

Troubled Equatorial Communications Co in Mountain View, California (see Company Results) has teamed up with Contel ASC, formerly American Satellite Co, for a joint marketing arrangement. The memorandum provides for the purchase by Contel ASC of $10m of Equatorial master earthstations, micro earthstations and associated equipment, the sum to be pre-paid to alleviate Equatorial’s cash squeeze. The memorandum also provides for Contel ASC to lend Equatorial $6m over six months, with repayment in December 1988, and for Contel ASC to assume a portion of Equatorial’s rights and obligations under its Galaxy III transponder lease with Burnham Leasing. Equatorial in turn will grant Contel an option to buy about 3.6m Equatorial shares at $3.25 a share. The understandings are subject to negotiation of definitive agreement and Equatorial’s ability to restructure a part of its obligations and obtain concessions from its lenders and lessors, in particular under its lease of transponders on the Galaxy III satellite. Equatorial has a virtual monopoly of low-speed satellite communications in the US, but has found that companies tend to regard the technology as experimental and are unwilling to commit their critical telecommunications business.

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