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Microcap & Penny Stocks : Globalstar Telecommunications Limited GSAT -- Ignore unavailable to you. Want to Upgrade?

To: djane who wrote (5433)	6/29/1999 1:36:00 PM
From: djane	Respond to of 29987

S&P may still cut Globalstar L.P. snr unsec debt (via LOR thread) Tuesday June 29, 11:22 am Eastern Time (Press release provided by Standard & Poor's) NEW YORK, June 29 - Standard & Poor's today assigned its single-'B'-plus rating to Globalstar L.P.'s $500 million secured bank facility. The rating is placed on CreditWatch with negative implications. Standard & Poor's single-'B' corporate credit and senior unsecured debt ratings on Globalstar L.P. remain on CreditWatch with negative implications, where they were placed Sept. 11, 1998. Globalstar's senior unsecured debt rating is the same as the corporate credit rating because the bank facility is secured by specific assets of Loral Space & Communications Ltd. (double-'B'-minus/Negative/--), which are external to Globalstar's corporate structure. Accordingly, senior unsecured creditors are not potentially disadvantaged by bank liens on Globalstar assets. The new credit facility is rated one notch above Globalstar L.P.'s corporate credit rating. The facility is secured with assets from the fixed satellite service business of Loral Space, which, as the managing general partner, owns 42% of Globalstar L.P. The pledged assets have been independently appraised, and represent significant overcollateralization sufficient to fully cover the bank facility in a default scenario. Globalstar L.P.'s rating reflects risks associated with operations in the development stage, including satellite launch risks and uncertainty of customer demand. The rating benefits somewhat from the company's strong base of strategic partners. The Globalstar system should enable local service providers, which include Globalstar L.P.'s strategic partners, to offer wireless voice telephony and data services to areas of the world that currently lack basic telephony and to enhance telecommunications to areas underserved or not served by cellular telephone. Total cost of the 52 satellite Globalstar system prior to commercial operation is anticipated to be about $3.8 billion. The majority of this has been financed to date with a combination of debt and equity. Proceeds from the bank facility, together with vendor financing, will support remaining capital requirements prior to commercial operation. These include outlays for additional spare satellites, system software, increased ground segment costs, and gateways and equipment for service providers. Dependent on the success of achieving planned subscriber targets, Globalstar L.P. is expected to generate positive cash flow in 2000. Resolution of the CreditWatch listing will depend on the successful commercial startup of the Globalstar system and the degree of market demand for the company's services, Standard & Poor's said. Related News Categories: options, US Market News Help Copyright © 1999 Reuters Limited. All rights reserved.