|
More
Information: |
|
|
Globalstar
Telecommunications Ltd. drew down a US$250-million credit line set
up in the form of a Chase Manhattan Bank facility, which was due
to expire on June 30. The agreement had been entered into in 1996
by the guarantors (Lockheed Martin, Qualcomm, DASA and Loral Space
& Communications, among others) of the facility who received
warrants for Globalstar common stock in consideration of their
guarantee. Under the terms of the agreement, the US$250 million
credit line has been replaced by pay-in-kind Globalstar notes due
in 2003. Pursuant to the 1996 agreement, the guarantors have
repaid the bank lenders all amounts outstanding under the bank
facility.
The US$250
million means that, under current cash flow forecasts, Globalstar
has enough liquidity to operate through March 2001, external of
any revenues. Instead of a US$160 million shortfall by year-end,
the company will have a projected US$90 million in the bank. The
company previously had enough cash to last until September.
Globalstar can focus on increasing subscriber numbers rather than
being in a constant fund raising role.
In fulfillment of
its contractual obligations under the guarantee, Lockheed Martin
has paid US$207 million, including applicable interest and fees to
Chase Manhattan Bank. Lockheed Martin has expressed its
disagreement with the form of satisfaction. Lockheed Martin is
entitled to repayment by Globalstar of the amounts paid under the
guarantee but has not yet reached agreement with respect to the
form and timing of repayment. Lockheed Martin does not consider
the pay-in-kind Globalstar notes, which replace the credit line,
to be sufficient surety for its cash risk. Loral Space &
Communications has paid US$57 million to Lockheed Martin. That
payment is based on a separate indemnification agreement made by
Loral to Lockheed Martin. Globalstar believes that the issuance of
its three-year notes to the guarantors satisfies its obligations
to them. Globalstar and Lockheed Martin are engaged in discussions
with a view to resolving this matter.
Qualcomm
has stated previously that it would not contribute additional
funds. Qualcomm, which sells Globalstar service in the United
States and elsewhere, laid off 400 to 500 employees that were
selling the service, reducing the unit's payroll by 30 percent.
Copyright 2001 - Andrews Space & Technology
Andrews Space & Technology Privacy
Statement and Copyright Information
SPACEandTECH Digest is a weekly roundup of the latest industry news of interest
to the space professional. SPACEandTECH Flash! is an internet push
service offered by Andrews Space & Technology to bring the
latest on orders, launches, and important breaking news to your
desktop. SPACEandTECH Digest and SPACEandTECH Flash! are part of
the Andrews Space & Technology www.spaceandtech.com
website, a website designed to serve the information needs of the
space industry.
If you would like to subscribe to the SPACEandTECH
Flash!
(currently a free service), contact the www.spaceandtech.com
Editor-in-Chief, Joe Hopkins, at editor@spaceandtech.com
|
