The end for Globalstar?
The end appears to be close for struggling mobile satellite operator Globalstar after further losses in the third quarter of this year. The company has announced it is finalising a pre-packaged voluntary bankruptcy plan as well as cutting a large portion of its workforce.
Mobile satellite telephone company Globalstar says it is finalising a pre-packaged voluntary bankruptcy plan and cutting around 29% of its workforce after posting a third quarter loss.
The troubled operator said it would file for Chapter 11 bankruptcy protection as soon as the plan is finalised.
"We believe we're going to get to the point where all the creditors and all the partners will come to an agreement that should ensure the business will continue," said Mac Jeffery, spokesman for Globalstar.
Despite predictions that the company had only enough money to last until the end of the year, it now expects to have around $45 million in cash at the end of the fourth quarter.
Globalstar will cut its staff to 125 this month, leaving less than half the original head count. The company now believes it will need much less additional funding to break even in 2002, said Jeffery.
Globalstar, which was founded in 1994, posted a third quarter loss of $129 million, despite a 14% increase in subscribers to 59 600.
Its operating expenses fell to $19.7 million, down from $45.9 million a year ago: a drop of 57%.
Globalstar debt holders will receive equity in a new Globalstar company under the plan, which is still under discussion.
Globalstar will not be the first mobile satellite company to file for bankruptcy. In 1999 Iridium called in the receivers, less than a year after it was set up by Motorola. A bidder stepped in at the last minute and bought the company, and its 66 satellites, for just $25 million. Motorola is thought to have invested close to $7 billion in the failed venture.