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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