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

To: dougjn who wrote (1993)	9/10/1998 6:30:00 PM
From: Valueman	Respond to of 29987

As you might have guessed: NEW YORK, Sept 10 - Moody's Investors Service has downgraded the issues of Globalstar L.P. and Globalstar Capital Corporation to Caa1 from B3. The senior implied rating of Globalstar has also be downgraded to Caa1 from B3. Issues affected are the $300 million 11.5% senior notes due 2005, the $325 million 11.25% notes, the $500 million 11.375% notes and the $325 million 11.25% notes, all due 2004. Structurally, the various issues carry the same risk. Globalstar is building a satellite-based wireless telecommunications system to carry international voice and data traffic on a wholesale basis to a network of designated terrestrial-based service providers worldwide. The rating change reflects the failed Zenit-2 launch of 12 Globalstar satellites and the delay in network completion as a result of that failure. This delay is in addition to a six month project delay recognized late last year (compared to the original plan). Additionally, the company will experience higher expenses to complete the network and will see a delay in the nearer-term revenues. This will require an increase in the amount of capital required to be raised in 1999. The Zenit-2 launch failure on September 9, 1998, was the first of three expected launches on the Ukrainian launch vehicle, which was planned to have carried a total of 36 of Globalstar's 56-satellite constellation. Globalstar has other vehicle options which it is scheduling, relying mostly on the Russian Soyuz (next six launches) followed by Boeing's Delta II (final three launches). Although both of these vehicles have a higher success record, they only carry four satellites and will therefore require a greater number of launches. Globalstar expects commercial operations to start in the third quarter of 1999, rather than the second quarter of the same year. This is accomplished in part by initiating service with a less complete network than previously contemplated. The full constellation completion will likely occur at the end of 1999 or early 2000. The company states that it can effectively operate the more limited constellation with minimal service degradation, but we are mindful that there will also be less room for error in that network. The company is limiting the financial impact by getting into operating service as quick as possible, but the operating risk increases, with a decrease in operating satellites, in-orbit spares and on-ground spares. Any further setback would be more difficult for the company to absorb. Financially, Globalstar expect that the delay will cost $100 million in operating losses for the three-month delay period, plus $85 million in additional hardware costs in order to buy the additional launch vehicles and insurance. Further, the company projects a $300 million decrease in 1999 revenues. This increases the company's funding risk in 1999. Since the situation is new, the company has not yet developed its funding plan. However, they stated that Globalstar would likely raise the additional funds needed in 1999 through the debt market. Additionally they expect to receive $190 million in insurance proceeds due to the failed Zenit mission. Although we have no reason to expect a delay in those funds, Globalstar is counting on those funds, in part, to pay for the new launch vehicles. In general, the Caa1 ratings also reflect the developmental stage of Globalstar's business; the risk of service providers receiving the necessary licenses from various governments; the lack of income until service is launched; and the potential for technological difficulties and further launch failures, which could lead to service delays and increased capital needs. --------------------------------------------------------------------------------

To: dougjn who wrote (1993)	9/10/1998 9:13:00 PM
From: Urlman	Read Replies (2) \| Respond to of 29987

globalstar.com

To: dougjn who wrote (1993)	9/11/1998 12:24:00 AM
From: A.J. Mullen	Respond to of 29987

It seems you need a morale boost on this thread. I bought in today. I have been skeptical with regards to Globalstar for a long time, and have posted my misgivings on the Qcom thread. I've owned Qcom off and (mostly on) for a while. I didn't accept that there were enough yachties in the deep ocean, engineers in Africa needing to call their office, or other migrant workers in African cities wanting to call their home-village; who could pay a realistic fee for this service. I still think that. It seems to me there are three scenarios whereby Sat systems could be successful. The first is the one I was discounting above; a few people who would have to pay an awful lot. Another scenario is if the price could be brought down so that Sat Com were cheaper than standard terrestrial PCS (standard = 'conventional' - we've come a long way!) I doubt that is in Qcom's mind for the immediate future or they wouldn't be invested so much in terrestrial systems. The third is for the less densely parts of the developped world to pick up the majority of the cost. Both Iridium and Globalstar have three-in-one telephones: Amps, PCS and Satellite. This seems to be the secret to getting satellite usage. With charges of $1.50 a minute within the US, I wouldn't choose this service, but I would think it would be useful if it were included in a phone I might buy anyway. Once I have it, I'll probably start using it when in the sticks. But tight-wads like me will never be the bread-and-butter of the system anymore than we are for PCS; I see delivery drivers using PCS phones all the time. They, and the high-powered "my time is worth a fortune types" will be the ones who will provide most of the revenues. With all these satellites roaming around of course, they roam over Africa, so the density of users only have to be sufficient to pay for a Base-Station for it to be viable to provide this service there. That's great. It's also great for the terrestrial PCS providers. When people complain about coverage, they can be pointed to dual or tri-mode phones. It will change an aspect of competition. It will not be simply coverage, but relative prices of the various coverages, and the extent of the cheapest coverage. By the way, Globalstar will never provide coverage over the deep ocean. I called them on this point for my work; I want communication with the eastern Pacific Ocean several thousand miles from land. It will have to be Iridium. There are no base stations out there, and no plans for them. Globalstar sats. are designed to relay directly down to a base station, whereas Iridium sats. will relay in space if necessary, so they can provide deep ocean coverage. By the way,I was not surprised by Iridium's delay; they couldn't give me accurate costs just weeks before the planned inauguration of the commercial service. I doubt that Globalstar will ever have true global coverage, but that's OK. Their system seems much simpler and should come in a lot cheaper. I do hope, for yachties and scientists, they don't push Iridium out of business completely though. I was thinking that Gstar might not be such a bad idea, then I saw todays news. Sure it wasn't good, if they lose more satellites, there could be problems. The fall seemed overdone to me though. Everyone is switching to the defensive. There was, of course, also the general market decline. Did people not realise that Starr was going to present his report? Where have they been hiding? That story is the same today as yesterday. AJ