Globalstar Awards Arianespace $210 Million Contract

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  Space News Business

Globalstar Awards Arianespace $210 Million Contract

By PETER B. de SELDING
Space News Staff Writer
posted: 20 September 2007
12:24 pm ET





PARIS —


Globalstar has agreed to pay Arianespace $210 million to launch 24 second-generation mobile-communications satellites aboard four Soyuz launch vehicles in 2009 and 2010. The launches will originate from the new Soyuz launch pads at Europe’s sprawling facility in Kourou, French Guiana.

According to Globalstar Chief Financial Officer Fuad Ahmad, the launch price – $52.25 million per rocket – will permit Globalstar to remain within its forecasts of being able to build, launch and insure its 48 second-generation satellites for a total of $1.2 billion, Ahmad said in a presentation to a Sept. 10 investor conference in New York organized by Jeffries & Co.



An Arianespace official said the contract will end up costing Globalstar more than $210 million because it includes a vendor-financing package for which Globalstar will pay Arianespace an undisclosed annual rate. In addition, the official said, the contract price is pegged to the cost of raw materials in Russia and Europe between now and the first launch. If these costs rise, so will the price to Globalstar.

For Globalstar, the advantage of




the contract is that it requires the company to make a negligible amount of payments to Arianespace before the first launch in mid- to late-2009, enabling Globalstar to conserve cash until then.

The Evry, France-based Arianespace consortium signed the launch contract with Milpitas, Calif.-based Globalstar Inc.




Sept. 5 in Paris.

The contract also includes




Globalstar’s
commitment to launch the remaining 24 satellites in its second-generation constellation with Arianespace between 2010 and 2014.

Ahmad said that the launch deal mirrors the satellite-manufacturing contract for the 48 second-generation satellites signed in November 2006 with ThalesAlenia Space of Cannes, France.

Thales
Alenia Space is providing the first 24 Globalstar second-generation spacecraft starting in mid-2009. Under contract terms that Globalstar and ThalesAlenia Space may modify, satellite delivery then would pause for an undetermined number of months.

In the interval, Globalstar would use the first 24 new-generation spacecraft, plus eight first-generation satellites scheduled to be in orbit by the end of this year, to operate a 32-satellite constellation.

Ahmad said a 32-satellite constellation, with four spacecraft in each orbital plane, will be able to provide “a commercially viable network” and let Globalstar replenish its cash accounts without making capital expenditures to ThalesAlenia Space and to Arianespace.

The expenditures then would resume – as would production of the final 24 satellites and the four Soyuz rockets needed to launch them – and would continue until




as late as 2014 with the launch of the last of the 48 satellites.

Russian-built Soyuz rockets will be launched from Europe’s Guiana Space Center spaceport starting in the spring of 2009 with a yet-unidentified customer on the maiden flight. Globalstar will not be the inaugural customer, industry officials said.

Each second-generation Globalstar satellite is expected to weigh about 700 kilograms at launch.

Halting production and launch of the satellites in this way will permit Globalstar to limit the amount of additional money it will need to raise from outside sources to about $150 million, Ahmad said. The rest of the financing, he said, will come from cash from operations, a $150 million line of credit that remains available, and $90 million of fresh cash promised by Globalstar’s principal owner, Thermo.

Ahmad said that in addition to having double the service-life expectancy of the first generation satellites – 15 years instead of 7.5 years – the second-generation spacecraft will be able to offer data transmissions at speeds of 144 kilobits per second on a single channel. That compares to 9.6 kilobits on today’s Globalstar satellites.