New ownership has provided mobile satellite services company Globalstar L.P. with hope in the new year.
The company last month announced plans to be acquired by equity investor Thermo Capital Partners L.L.C. for $43 million. “We think this really restores our credibility,” said Globalstar President Tony Navarra. With Thermo’s backing, the company, which has been operating under Chapter 11 bankruptcy protection since early 2002, plans to emerge from bankruptcy in the first quarter of the year.
Under its new ownership, Globalstar will continue operations under the same name with management enacting new goals that have been developed in part by Thermo, said Navarra.
Among those goals are for Globalstar to re-launch its spare satellites. The company has eight spares on the ground with plans to launch them into orbit four at a time to enhance the existing communications system as well as to replace older, active satellites, Navarra said. The company expects the spare satellites to keep the system healthy at least through 2010.
Under its new ownership, Globalstar also plans to initiate new product development in the voice and data arenas. Navarra said that product development likely will include the continued deployment of Globalstar’s Simplex modem, used for remote asset tracking mainly by customers in the gas and oil, transportation and utility industries.
Globalstar is also working to develop a solution to increase the processing power of its phones to 64 kilobits, nearly a seven-time increase from the company’s existing 9.6-kilobit satellite phones. The increase in processing power will allow users to send more data faster, said Navarra. Globalstar has developed 64-kilobit phones as prototypes, but has yet to put them into commercial production.
Globalstar’s largest growing customer segment is the industrial sector including maritime, oil and gas and aviation, according to Navarra. The company’s military and homeland security-related initiatives also have experienced a surge and it continues to serve consumers as well. The company recently announced it surpassed the 100,000-subscriber mark. “People sometimes measure us against the wireless market, but we don’t really compete,” said Navarra, emphasizing the different needs for the satellite and cellular industries.
Thermo’s acquisition of Globalstar was the final chapter in a drawn-out process. In April, Thermo said it would invest $55 million in the company for a 67-percent stake. But two weeks later, Craig McCaw’s ICO Global Communications Ltd. announced its own intentions to purchase Globalstar in a $55 million transaction that would net ICO a 54-percent equity stake in Globalstar. The offer followed Globalstar’s receipt of $10 million in debtor-in-possession financing from five lenders, one of which was ICO Investment Corp., a subsidiary of ICO.
Thermo’s original proposal was void after McCaw’s seemingly last-ditch effort to buy the company. However, the Federal Communications Commission delayed the ICO transaction for months following concerns from the Justice Department and FBI regarding the merger. Finally, in November, Globalstar filed yet another reorganization plan, this one calling for Thermo to invest $43 million in the company in exchange for an 81.25-percent ownership stake.
