Roller coaster January for struggling satcom provider Globalstar

Globalstar LP and its Canadian counterpart Globalstar Canada endured a turbulent January as the struggling mobile satellite communications provider received a proposed investment that would have kept the company afloat and then had the proposal pulled off the table at the last minute. The roller coaster ride continued last week when Globalstar was given the right to implement a terrestrial in-fill network to complement its satellite coverage in urban areas, but had a 2 GHz licence awarded to it in July 2001 deemed null and void. Last month, New Valley Corp. had apparently breathed new life into Globalstar when it offered up a US$55-million investment that would have kept the company afloat, allowed it to kickstart sales and marketing activities, revive product development programs and help speed its emergence from Chapter 11 protection. The company filed for Chapter 11 bankruptcy protection in November 2001 (RoW Update, Nov. 19/01). New Valley, a Florida-based real estate firm, proposed to invest an initial US$20 million with the balance being forwarded after the company emerged from bankruptcy protection, expected in the June/July timeframe. Peter White, GM of the Canadian outfit, told Report on Wireless prior to the funding being pulled off the table that this was a major step forward in the healthy recovery of the company. With additional funding in place, Globalstar could now build on the success of its new pricing plan (RoW, Sept. 03/02) and attack the larger opportunities with a company that was going to make a multi-year commitment for a broad-based communications strategy, he added. "From our standpoint, what this (financing) allows us to do is to solidify a number of those larger opportunities, where larger organizations, government customers and others were waiting to see that we did have the financing in place," White said. On the product development side, the injection of cash would have gone towards reviving some of those programs and the company anticipated a significant jump in the number of product offerings in the future. "We’ve got a number of different products particularly aimed for data and the aviation marketplace for the immediate future. There’s also a number of general evolutionary products that we were working on that had to be put on hold during this time period," White explained. But all that is for naught since New Valley pulled the financing deal off the table on January 30. It appears that a rift between New Valley and the creditors committee emerged over the value of the company. Reports indicate that the disagreement stemmed from the Federal Communications Commission’s (FCC) decision (now final) to allow mobile satellite service (MSS) providers to build an ancillary terrestrial component (ATC) to their primary satellite network to improve coverage in urban areas. The FCC’s January 30 ruling does, however, give new hope to Globalstar at least on the ability to expand its coverage area into urban areas. However, the struggling MSS provider’s ability to exploit this new network feature will only be made possible if it can secure financing. The creditors committee, which includes representation from Loral Space & Communications and Qualcomm Inc., is currently searching out potential investors. The lack of funding may have also hampered Globalstar’s ability to meet certain milestones associated with a new satellite constellation for which the company was awarded a licence in July 2001 (RoW, July 24/01). The company had applied for an extension of certain milestones, which would have delayed the launch of the first satellite by 27 months. However, the FCC didn’t believe Globalstar’s extension was warranted and on the same day it granted MSS providers the right to build an ATC, it deemed Globalstar’s licence null and void.

Roller coaster January for struggling satcom provider Globalstar

News | 02/04/2003 5:00 am EST

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