Globalstar L.P. reported revenues for the fourth quarter and year ended Dec. 31 of $1.1 million and $3.7 million, respectively, however the company continues to see minimal growth in voice traffic and said in its annual filing with the Securities and Exchange Commission it could seek bankruptcy protection if it cannot execute a restructuring plan.
Globalstar recorded a net loss of $3.8 billion, or $20.85 cents per share, for the year, but it believes the $197 million in cash it has on hand will be sufficient to continue its operations through the rest of the year.
The company said that as of March 18, it had a total of 40,009 mobile and fixed subscribers.
In January, Globalstar announced it was suspending payments on all its debt. Independent auditor Deloitte & Touche L.L.P. said this move, in addition to Globalstar’s difficulty in securing more financing, raises substantial doubts about its ability to achieve successful operations.
“These factors, in turn, raise doubt regarding Loral/Qualcomm Satellite Services L.P.’s ability to continue as a going concern,” Deloitte & Touche said.
Loral Space & Communications Ltd. owns about 40 percent of Globalstar, while Qualcomm and several others own the remainder.
Globalstar Telecommunications Ltd., the public Globalstar entity, and Loral also have several lawsuits pending against them, including one filed two weeks ago on behalf of purchasers of securities of Globalstar between Dec. 6, 1999, and Oct. 27, 2000. The lawsuit claims, among other things, Globalstar issued false and misleading statements concerning its prospects and financial status, as well as the sale of its satellite phones.
Globalstar said if it is unable to effectuate an out-of-court restructuring plan, it may be forced to seek protection under federal bankruptcy laws, and its creditors may seek to initiate involuntary bankruptcy proceedings against the company.
The company has retained The Blackstone Group to assist it in developing restructuring initiatives. Blackstone recently presented a preliminary set of analyses and recommendations, and the Globalstar partners are reviewing and evaluating a number of possible actions to adjust and improve Globalstar’s business plan.
Going forward, Globalstar hopes to relieve some of its financial burden by following the path of the new Iridium Satellite L.L.C. and focusing more on industrial customers.
“Vertical industries such as transportation, maritime and natural resource exploration represent significant opportunities for us in terms of high-subscriber, high-usage customers, and we are working with our service providers to redirect efforts and resources toward these potential customers,” said Tony Navarra, president of Globalstar.
Globalstar also intends to expand service in new markets and ramp up its data applications.
