Qualcomm Inc (QCOM)

[nieves]

Globalstar gets $55M lifeline



RELATED SYMBOLS: (QCOM)(NVAL)(LOR)

Jan 16, 2003 (The Deal via COMTEX) -- Floundering satellite telephone company
Globalstar LP got a new lease on life Wednesday, Jan. 15, when investment group
New Valley Corp. agreed to supply the bankrupt company with $55 million in
funding.

Terms of the deal, which is subject to Delaware bankruptcy court approval, call
for New Valley to provide $20 million in debtor-in-possession financing and
another $35 million should Globalstar emerge from Chapter 11 protection. In
return, New Valley would own a majority stake of Globalstar while its creditors,
which include founders Qualcomm Inc. and Loral Space and Communications Ltd.,
and bondholders would own the remainder.

Creditors and bondholders also will be given warrants to buy additional shares
of Globalstar. Should all the warrants be exercised, New Valley would own about
50% of the company.

Olof Lundberg, chairman and CEO of Globalstar, said the new capital "will give
us the resources to both strengthen our existing service and broaden our
portfolio of voice and data products."

Globalstar was established in 1995 by wireless technology firm Qualcomm of San
Diego and New York-based Loral to offer worldwide, satellite-based mobile
telephone service. But national and international expansion by terrestrial
cellular service providers quickly made Globalstar's offering irrelevant to most
consumers, and the company was unable to generate enough revenue to pay for its
expensive satellite launches and other startup costs.

Globalstar filed for bankruptcy protection in February. In November the company
warned it was running low on cash and was seeking DIP financing to complete its
reorganization.

New Valley CEO Bennett S. LeBow said Globalstar will reorganize successfully now
that it has the cash it needs.

"We strongly believe that Globalstar is best positioned to meet the increasing
demand for high-quality, low-cost mobile satellite telephony, data collection
and Internet communications," LeBow said in a statement. "We are confident that
New Valley's investment in Globalstar will enable the company to further expand
its growing customer base and progress towards profitability."

Most of Globalstar's brethren in the once-hyped satellite telephone sector have
scaled back significantly or disappeared. Iridium LLC, originally backed by
Motorola Inc., declared bankruptcy in August 1999. A group called Iridium
Satellite LLC, headed by former Pan Am World Airways president Daniel Colussy,
bought the satellite firm's assets for $25 million in December 2000.

Another company, ICO Global Communications Ltd. of London, also went bankrupt.
Financier Craig McCaw led a group that provided $1.2 billion to acquire ICO out
of bankruptcy in May 2000.


by Lou Whiteman in Atlanta
URL: http://www.TheDeal.com

(C) Copyright 2003 The Deal, L.L.C. All rights reserved.

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INDUSTRY KEYWORD: Telecommunications
SUBJECT CODE: Bankruptcies

(Equity Analysis)





Daniel Nieves