Suspends payments on funded debt. Retains The Blackstone Group to advise on future financial initiatives.
Globalstar announced today that, in order to have sufficient funds available for the continued progress of its marketing and service activities, it has suspended indefinitely principal and interest payments on all of its funded debt, including its credit facility, vendor financing agreements and Senior Notes, as well as dividend payments on its preferred stock.
This decision, which has been endorsed by Globalstar’s partners, is designed to ensure the uninterrupted continuation of Globalstar’s satellite-based communications service and further deployment of these services around the world. The company’s service provider partners have reaffirmed their confidence in Globalstar’s business and technology, as well as their commitment to maintain and expand operations in their own territories.
The partners further believe that Globalstar’s superior technology and flawless operation underscore its long-term value as a system that provides high quality voice and data services around the world. Since Globalstar’s service introduction in 2000, Globalstar and Qualcomm engineers have developed a number of new data applications which are well-suited to the Globalstar system, holding further promise for Globalstar’s future growth.
Globalstar is continuing to meet its obligations to its employees, customers, and trade suppliers in the normal course, and believes it has sufficient cash on hand ($195 million as of December 31, 2000) to meet these obligations on an ongoing basis. The suspension of principal and interest payments on its funded debt will conserve approximately $400 million of the company’s cash for the year 2001.
Globalstar believes that the suspension of these payments will enable the company to have sufficient cash to fund its operations into the year 2002, giving its partners additional time to implement their new marketing initiatives, including new vertical market sales programs and expanded marketing of data services.
Globalstar did not make the $45 million interest and principal payments due yesterday on its Loral credit facility and under its vendor financing agreements with Qualcomm and Loral.
Globalstar has retained The Blackstone Group as its financial adviser to assist in developing initiatives as the company moves forward, including restructuring Globalstar’s debt, identifying funding opportunities and pursuing other strategic alternatives.
Globalstar, led by founding partner Loral Space & Communications, is a partnership of the world’s leading telecommunications service providers and equipment manufacturers, including co-founder Qualcomm Incorporated, Alenia, China Telecom (HK), DACOM, DaimlerChrysler Aerospace, Elsacom (a Finmeccanica Company), Hyundai, TE.SA.M (a France Telecom/Alcatel company), Space Systems/Loral, and Vodafone Group Plc. For more information, visit Globalstar’s web site at www.globalstar.com.
Globalstar will hold a conference call to discuss this announcement at 10:30 a.m. Eastern Standard Time today, January 16, 2001. Investors, analysts and other interested parties may dial into the conference call at 1-888-849-9215 for domestic access and 1-212-896-6043 for international access. You may also access the call at www.globalstar.com.
