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To: Jorj X Mckie who wrote (14966)	2/15/2002 7:49:42 PM
From: Augustus Gloop	Read Replies (1) \| Respond to of 23786

Friday February 15, 7:36 pm Eastern Time Globalstar Files for Chapter 11 Bankruptcy By Ben Berkowitz LOS ANGELES (Reuters) - Satellite telephone provider Globalstar LP (Nasdaq:GSTRF - news) said on Friday filed for Chapter 11 bankruptcy protection, as it had said it would do more than three months ago, under a restructuring plan worked out in advance with its major creditors. Globalstar, which had said in November it would have to file for bankruptcy, was created in 1994 with the goal of creating a global mobile telephone system for business travelers and others, but was hurt by high operating costs, heavy and unattractive handsets, and steep per-minute rates charged to customers. San Jose, California-based Globalstar, which filed for bankruptcy in federal court in Delaware, said it expects operations for its remaining 66,000 customers to continue uninterrupted after the filing. Globalstar had liabilities of $3.4 billion at the time of its filing, spokesman Mack Jeffery said. He could not immediately provide an asset total. The company said it had $46 million in cash but would require new investment after it emerges from bankruptcy, it said in a statement. Under the restructuring plan, Globalstar said a new company would be created that would be owned by its current bondholders and other unsecured creditors. All of the current Globalstar's assets, including its satellites, would be transferred to the new entity. The new entity will also acquire all of the equity stakes in service providers Globalstar USA, Globalstar Caribbean and Globalstar Canada that were owned by Vodafone Group (quote from Yahoo! UK & Ireland: VOD.L) and Loral Space & Communications Ltd. (NYSE:LOR - news). ``What it'll do is remove uncertainty and help us add new customers,'' Jeffery said. PARTNERSHIPS CANCELED Globalstar also said all of the partnership interests in its current operations would be canceled under the reorganization. Jeffery said that would leave the company's current partners, such as Qualcomm Inc. (NasdaqNM:QCOM - news) and Loral, with ``zero or next to zero'' equity in the new company. Both Qualcomm and Loral are also major creditors of the company. Globalstar defaulted in early January 2001 on both a vendor financing facility worth nearly $600 million from Qualcomm and a credit facility worth $500 million from Loral. Jeffrey said shareholders in the partnership entities may get the opportunity to buy shares in the new company, which may or may not carry the Globalstar name. Loral issued a statement on Friday saying it was unaffected by the bankruptcy filing because it wrote down its investment in Globalstar as of Dec. 31, 2000. San Diego-based Qualcomm could not be immediately reached for comment. Jeffery said most of the partners in Globalstar own and have licenses to ground gateways that connect calls to and from the company's constellation of satellites, and that those ownership interests for the most part will continue. ``They still have those operations,'' he said. ``There's some discussion of ... having some of the gateways change hands.'' The bankruptcy plan, which the company had said was possible as far back as early 2001, also includes the company adopting a new business model. That business plan will include consolidating market and operations for major territories under the new company, target markets such as aviation and government, and more efficient use of spectrum. Globalstar faced a number of lawsuits related to its performance in 2001. Some bondholders in the company filed a class-action suit against it in February of last year, demanding payment on bonds that had been due Nov. 2004. Globalstar has petitioned to dismiss that suit. A subsidiary of telephone manufacturer Ericsson has also filed arbitration claims against the company, demanding $64 million under two phone handset purchase contracts it claims were not fulfilled.