Globalstar tank nearly empty

Globalstar this week posted a second-quarter loss, announced its plans to reduce its staff to 175 employees and said it has only $98 million in cash and cash equivalents for the remainder of the year, compared with the $138 million it had at the end of the first quarter.

The company, which has warned that it might file for bankruptcy protection if it cannot restructure, intends to have a plan for survival in the next couple of months, said Mac Jeffery, senior communications director for Globalstar.

Although Globalstar has realized that its original market forecast may have been too optimistic, the company sees no change in its original projection that there is a market out there to serve, Jeffery said.

“What has changed is we clearly had underestimated the time it would take to tap that market. We were too ambitious,” he said. Jeffery said Globalstar’s plan now is to restructure and bring in outside investors that will give it one or two more years during which to prove its business case.

In January, Globalstar retained The Blackstone Group as its financial adviser to help it develop initiatives moving forward, to restructure Globalstar’s debt and identify funding opportunities and other strategic alternatives.

Blackstone has evaluated Globalstar’s business and determined it is viable. Now it is serving as the middleman between Globalstar and its bondholders to keep the dialogue open as well as helping the company to contact potential investors.

At this point Blackstone has just about finished Globalstar’s formal business proposal, which will be presented to potential investors very soon, Jeffery said.

“We really have to get going. We have money until the end of the year but realistically we have to have things locked down before then,” he said. “Blackstone is convinced there is a market for this. Now the key is finding the right investors. It would be nice to have just one investor, but my hunch is that there will be a few.”