Globalstar Advances Toward Merger With ICO
Changes already are occurring in anticipation of the previously announced merger between mobile satellite service (MSS) providers – San Jose, Calif.-based Globalstar [OTCBB: GSTRF.OB] and London-based ICO Global Communications (Holdings) Ltd.
The first public sign of the merger occurred June 30 when Globalstar CEO and Chairman Olof Lundberg announced his resignation. Lundberg, who joined Globalstar in 2001 to help guide the company through its restructuring process, said the timing was right for him to leave now that Globalstar is ready to emerge from Chapter 11 bankruptcy protection.
With ICO’s planned purchase of a majority stake in Globalstar, the combined company would have access to the financial resources of telecommunications pioneer Craig McCaw, along with other well-heeled investors.
“I am very proud to have been a part of the turnaround of Globalstar,” Lundberg said. “Over the past two years, the company’s business has not only been rebuilt but also strengthened and expanded, with a new business model and a better understanding of market opportunities. With Globalstar’s restructuring nearing its completion, this is now the right time to begin moving responsibility over to the company’s soon-to-be new owners.”
The company has no immediate plans to name a successor to Lundberg, pending completion of the acquisition process. Tony Navarra, Globalstar’s president, remains in his post and continues to lead the company on a day-to-day basis.
Globalstar is expected to complete its Chapter 11 restructuring process “well before” year-end, said Mac Jeffery, a Globalstar spokesman. The process entails the transfer of Globalstar’s spectrum license to ICO, bankruptcy court approvals and the resolution of various legal matters, he added.
“None of those issues are expected to be problematic at all,” Jeffery said. “But they all take time.”
The bankruptcy court judge already has approved ICO’s selection as the Globalstar’s buyer. ICO also agreed to assume responsibility for Globalstar’s debtor-in-possession (DIP) financing requirements of $20 million to $30 million to keep the company operating until the bankruptcy process and merger with ICO are completed, Jeffery said.
Globalstar has cut its costs substantially during the bankruptcy process. Last week, the company passed along some of those savings to its customers by trimming its rates for global roaming and international calls. The company’s price for global roaming and international rates have been dropped to put Globalstar’s pricing “substantially below” rival Iridium Satellite of Arlington, Va.
(Mac Jeffery, Globalstar, 408/933-4434)