spacetoday.net: Globalstar creditors reject investment plan

Posted: Fri, Jan 31, 2003, 8:54 AM ET (1354 GMT)
Globalstar satellite illustration

Creditors of bankrupt satellite communications company Globalstar abruptly rejected Thursday a proposed $55 million bailout of the company by an investment company. Earlier this month New Valley Corporation, a real estate investment firm, announced it would provide $20 million in debtor-in-possession financing to keep Globalstar alive, then purchase a majority stake in the company for $35 million to take the company out of Chapter 11 bankruptcy protection. However, both New Valley and Globalstar announced Thursday that the deal had been terminated because New Valley could not reach a final agreement with Globalstar's creditors. Globalstar officials said in a statement that the creditors, which include Loral and Qualcomm, will provide their own interim financing as the company talks with other potential investors. The announcement came the same day that the FCC ruled that satellite communications companies could augment their service with terrestrial repeaters. Dow Jones reported that Globalstar's creditors believe that the favorable ruling could "dramatically increase Globalstar's valuation", allowing the creditors to get a better deal.