Bloomberg. Globalstar Completes Financing with $500 Million Credit Facility
By Josh Fineman at Bloomberg News
24 June 1999
Globalstar Telecommunications Ltd., which expects to start its
satellite-based telephone network in September, said it
obtained a $500 million credit facility that completes the
financing it needs to begin operating.
New York-based Globalstar, which is 42-percent owned by
Loral Space & Communications Ltd., got the credit facility
from Bank of America Corp. The facility is guaranteed by two
subsidiaries of Loral, which pledged assets to back the loan.
The loan's significance is underscored by the fact that
analysts had questioned its ability to obtain funding at a time
of recurring problems in the satellite business. Iridium LLC, a
competitor that beat Globalstar to the market for
satellite-based phone service, has had trouble selling its
service and may default on $800 million in bank loans.
"The financing is key to Globalstar, as it virtually completes
their financing needs," said William Kidd, an analyst at C.E.
Unterberg Towbin, who has a "buy" rating on the stock. "It's
especially important as there were concerns about how and
when the money was going to be raised because of the recent
tight satellite capital markets. I believe this financing puts
those questions to rest."
Globalstar expects the facility to be completed by the end of
next month. It now has raised $3.8 billion for its system,
including the latest credit line. Globalstar has 24 satellites in
orbit, half of its planned 48-satellite constellation.
Shares of New York-based Globalstar rose 2 1/2 to 19 11/16.
Loral rose 7/16 to 17 3/4.
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