Globalstar’s Settlement with Thales Puts Constellation Back on Track

[Satellite TODAY Insider 06-27-12] Globalstar and Thales Alenia Space have agreed to the terms of a commercial proposal that will allow Globalstar to purchase six additional spacecraft from the manufacturer and avoid a potential long-term and costly litigation process, the MSS operator announced June 25. 

   Globalstar Chairman and CEO Jay Monroe said his company and Thales have settled all prior claims filed against one another and that the mutual settlement ensures that Thales will complete its current work under Phase 2 of its existing contract. A fourth batch of six Globalstar constellation satellites could be launched within the year.
   “This agreement both settles the previous disputes between Globalstar and Thales and establishes a clean slate for the program once again such that the parties are now positioned to work as strategic partners for the long-term,” Monroe said in a statement. “We would like to thank Thales and the French bank group [Coface] for their hard work over the past several weeks and look forward to working with them as we complete the fourth launch this year and further secure the health of the constellation for the long-term.”
   Globalstar and Thales also agreed to the terms of a purchase of six additional second-generation satellites from Thales, with construction expected to begin this year. Monroe said he expects to enter into a commercial contract based upon these terms with Thales in the near future.
   In May, Globalstar lost an arbitration hearing against Thales Alenia Space, which had sought to force Thales to manufacture and deliver up to 23 additional satellites under a “Phase 3” contractual option in addition to the 25 purchased under the contract’s Phases 1 and 2. The arbitrators ruled that Thales was not obligated to deliver the Phase 3 satellites, leaving it up to the parties to negotiate new terms for any such deliveries. The arbitrators also awarded Thales a 53 million euro ($67.72 million) contractual termination charge.
   In a filing Globalstar recently submitted with the U.S. Securities and Exchange Commission (SEC), the company said a long legal battle would delay new service launches and seriously impact its profitability. The operator added that it would have been forced to consider strategic alternatives, including Chapter 11 bankruptcy protection.
   Globalstar amended its Coface export credit facility agreement in March to significantly extend the initial principal repayment date beyond 2012. Globalstar’s first repayment date will now be as late as June 2013 instead of June 2012. The precise date is dependent on the date of Globalstar’s fourth launch of second-generation satellites.

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