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Globalstar suspends debt payments
Posted: Tue, Jan 16, 2001, 2:26 PM ET (1926 GMT)
Globalstar satellite illustration Struggling satellite phone operator Globalstar announced early Tuesday it was suspending debt payments to two of its largest creditors in an effort to conserve cash and stay alive. The company announced it failed to make a scheduled $45 million payment on Monday to Loral and Qualcomm and would not make similar payments in the future. That move will save the company about $400 million in 2001 -- it has less than $195 million in the bank now -- which should allow it to continue operations into 2002. Loral, who owns 39 percent of Globalstar and holds 27 percent of its debt, endorsed the move, saying it would write down some of its investment value and take a one-time charge to its fiscal 2000 4th quarter earnings. Qualcomm, in a separate statement, said it was "evaluating the effects" of the announcement and would likely take a small one-time charge to its earnings as well. Globalstar has also retained a financial advisor, The Blackstone Group, to look at debt restructuring, funding opportunities, and strategic alternatives. Globalstar stock traded down nearly 50 percent on the NASDAQ Tuesday as a result of the announcement.
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