Globalstar Clarifies Funding Requirements
BusinessWire, 06/19/2000 10:09
NEW YORK--(BUSINESS WIRE)--June 19, 2000--Globalstar (NASDAQ:GSTRF) today issued the following statement to clarify its future funding requirements.
"Globalstar has been consistently open and candid with the investment community regarding its funding requirements," said Bernard L. Schwartz, chairman and chief executive officer of Globalstar. "We have previously reported that Globalstar has sufficient funds on hand to continue the deployment of the Globalstar system and that we will most probably require additional funding in the September/October timeframe. At that time we expect to be in a more favorable position due to stronger evidence of deployment progress.
"We are confident in our ability to raise funding as required to meet Globalstar's needs and at the appropriate time will consider several options available to us including support from our partners. Globalstar, with substantial participation from its partners, has raised $4 billion for system development and deployment. They are aware of our funding requirements and have indicated intentions to support the project to its successful conclusion. We see no need to accelerate our timetable, and thus, to date, no plan has been submitted to our partners or to anyone else. Reports that requests for additional funding have been made and rejected are inaccurate," Mr. Schwartz concluded.
The company has previously stated that, without giving effect to any revenue and assuming that a $250 million bank credit is allowed to expire at the end of June 2000, Globalstar will need a maximum of $160 million by year-end 2000, an amount which will be offset by revenues received to that point. The company, which reports minutes of use and revenue on a quarterly basis, noted that while the roll-out of service has been slower than expected, recent activity continues to provide positive evidence of a steady build-up. Usage continues to increase weekly and service providers remain confident that Globalstar will succeed in penetrating its selected markets. Within the past few weeks:
-- Commercial service was introduced in China and the United Kingdom; also Globalstar Saudi Arabia began the soft launch of its service, bringing Globalstar service to a very high-potential market where over 90% of the country has no cellular coverage. In Russia, another very large market, the first gateway is in operation with full commercial service to begin within the next few weeks.
-- South Korean security staff at last week's historic summit between North and South Korea in Pyongyang used Globalstar phones to communicate with each other and back to their offices in Seoul. Not only did the phones operate flawlessly, but also their use represented the very first commercial telephone service between the two countries in nearly 50 years, itself an historic event.
-- Globalstar Canada has sold phones into both the federal government and seven provincial governments so far. In the U.S., the General Services Administration recently approved
Globalstar products and services for purchase by all branches of the government, including the armed forces.
-- Marine kits were introduced in both North American and European markets, opening up still greater sales opportunities in both the commercial and leisure maritime markets.
Globalstar, led by founding partner Loral Space & Communications, is a partnership of the world's leading telecommunications service providers and equipment manufacturers, including co-founder Qualcomm Incorporated, Alenia, China Telecom (HK), DACOM, DaimlerChrysler Aerospace, Elsacom (a Finmeccanica Company), Hyundai, TE.SA.M (a France Telecom/Alcatel company), Space Systems/Loral, and Vodafone AirTouch. For more information, visit Globalstar's web site at www.globalstar.com.
Loral Space & Communications (NYSE:LOR) is the managing partner and, at 40 percent, is the largest equity owner of Globalstar. Loral is a high technology company that concentrates primarily on satellite manufacturing and satellite-based services, including broadcast transponder leasing and value-added services, domestic and international corporate data networks, global wireless telephony, broadband data transmission and content services, Internet services, and international direct-to-home satellite services. For more information, visit Loral's web site at www.loral.com.
This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In addition, from time to time, Globalstar L.P. ("Globalstar"), Globalstar Telecommunications Limited ("GTL"), or its representatives have made or may make forward-looking statements, orally or in writing. Such forward-looking statements may be included in, but are not limited to, various filings made by Globalstar or GTL with the Securities and Exchange Commission, press releases or oral statements made with the approval of an authorized executive officer. Actual results could differ materially from those projected or suggested in any forward-looking statements as a result of a wide variety of factors and conditions. These factors and conditions have been described in the section of the company's annual report on Form 10-K for the fiscal year ended December 31, 1999, entitled "Certain Factors That May Affect Future Results."
CONTACT: Globalstar
Mac Jeffery
212/338-5383
KEYWORD: NEW YORK
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