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Globalstar Secures An Additional $105 Million In Financing

By | September 21, 2000

      In another shrewd financing move by Globalstar Telecommunications Ltd. [GSTRF], the company has secured an additional $105 million. The company earlier this week (Sept. 19) announced that it has entered into a purchasing agreement with Bear Stearns under which the New York-based investment firm will purchase up to $105 million of shares of Globalstar common stock.

      Under the terms of the agreement, Bear Stearns will sell the shares of common stock it purchased directly to certain investors or in the market. The purchase price will be based on market price at the time of each purchase.

      Globalstar announced that it will use the proceeds from the sales to purchase partnership interests in Globalstar L.P., which, in turn, will use the proceeds for general corporate purposes including capital expenditures, operations and interest expense.

      “I’m always impressed with [Globalstar Chairman and CEO] Bernie Schwartz. He always manages to find some clever way out of a financial corner,” said Ahmad Ghais, president of the Mobile Satellite Users Association.

      …The Newtwork Is Built, Will The Customers Come?

      “This is a slight positive for Globalstar, considering that it still has not exhausted Loral’s [LOR] resources,” reported C.E. Unterberg, Towbin. “Nevertheless, business fundamentals remain the ultimate determinant of shareholder value and those still remain challenging.”

      “Despite the positive financing, we’re still not excited about Globalstar shares. We continue to believe that Globalstar’s slow subscriber progression makes it too speculative.” Unterberg added. “We also believe that significant risk still exists and that the company, at best, will only likely be able to structure a partner financing that ensures operating until year end 2001 on a worst-case basis. Unless the business significantly accelerates, it will take years for Globalstar to start tangibly building shareholder value.”

      Unterberg maintained its neutral rating on Globalstar shares.

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