Globalstar Telecommunications Ltd. suspended payments to debt holders Tuesday so that the troubled satellite phone company will have enough money to stay viable into 2002.
The San Jose-based company said it would save about $400 million this year by the action, which was made to ensure continued operations of Globalstar's satellite-based data and voice services.
"We believe the actions we have just taken will give us the time required to allow service providers to aggressively add fuel to their new marketing efforts," said Bernard Schwartz, Globalstar's chairman and chief executive officer.
Shares of Globalstar dropped more than 45 percent to $1.05 Tuesday on the Nasdaq Stock Market. The company also announced that it was suspending dividend payments on its preferred stock.
Globalstar is one of several companies seeking to market mobile phone and data service from any place on the planet using a constellation of satellites. None is doing well financially, largely due to the cost of launching satellites and limited markets so far.
The decision to halt payments on debt could land the company in bankruptcy court -- if bond holders decide to take that action.
"We're hopeful all bondholders will recognize that the actions we're taking today are designed to improve the situation," Schwartz said.
Schwartz also said the company will continue to meet obligations to employees, customers and trade suppliers.<
Please purchase a Premium Subscription to continue reading.
To continue, please log in, or sign up for a new account.
We offer one free story view per month. If you register for an account, you will get two additional story views. After those three total views, we ask that you support us with a subscription.
A subscription to our digital content is so much more than just access to our valuable content. It means you’re helping to support a local community institution that has, from its very start, supported the betterment of our society. Thank you very much!
Only subscribers can view and post comments on articles.
Already a subscriber? Login Here
Planning your dream wedding? Discover everything you need at the Wedding Fair in the Park – … Read moreWedding Fair in the Park
“Side-splittingly funny and brilliantly chaotic” Read moreThe Play That Goes Wrong
Dirk van Ulden said:
Success! An email has been sent to with a link to confirm list signup.
Error! There was an error processing your request.
Sorry, an error occurred.
Already Subscribed!
Cancel anytime
Thank you .
Your account has been registered, and you are now logged in.
Check your email for details.
Submitting this form below will send a message to your email with a link to change your password.
An email message containing instructions on how to reset your password has been sent to the email address listed on your account.
No promotional rates found.
Secure & Encrypted
Thank you.
Your gift purchase was successful! Your purchase was successful, and you are now logged in.
| Rate: | |
| Begins: | |
| Transaction ID: |
A receipt was sent to your email.
(0) comments
Welcome to the discussion.
Log In
Keep the discussion civilized. Absolutely NO personal attacks or insults directed toward writers, nor others who make comments.
Keep it clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
Don't threaten. Threats of harming another person will not be tolerated.
Be truthful. Don't knowingly lie about anyone or anything.
Be proactive. Use the 'Report' link on each comment to let us know of abusive posts.
PLEASE TURN OFF YOUR CAPS LOCK.
Anyone violating these rules will be issued a warning. After the warning, comment privileges can be revoked.