Loral Awarded Contract to Build 60 Satellites for Globalstar 2GHz Constellation

Loral Awarded Contract to Build 60 Satellites for Globalstar 2GHz Constellation

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Globalstar has awarded Space Systems / Loral (SS/L) a contract for design and future construction of its 2 GHz satellite system. The contract calls for a new constellation of 56 low-earth-orbit (LEO) satellites, supplemented with four geostationary orbit (GEO) satellites to provide additional system capacity, particularly for data applications, along with coverage to remote areas not easily served by Globalstar’s LEO satellites. With the signing of the contract, work will commence immediately on the planning and designing of the new spacecraft. The contract calls for all 60 satellites to be delivered to Globalstar on orbit starting in 2006. SS/L was also responsible for the design and construction of the original Globalstar satellite constellation. No financial or technical details were disclosed.

The U.S. Federal Communications Commission (FCC) granted Globalstar a license to use the 2GHz mobile radio spectrum, in July 2001. The contract fulfills the FCC requirement that Globalstar enter into a construction contract, by July 17, 2002, for new satellites to use this spectrum.

On February 15, 2002, Globalstar filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court in Delaware. The reorganization is likely to occur over a period of months. Globalstar listed US$573.4 million in assets and US$3.34 billion in debts in the Chapter 11 filing. The company had approximately US$46 million of cash on hand at that time. Globalstar and its partners have been developing a new business plan that is intended to form the basis for restructuring the company’s finances and to ensure uninterrupted service for Globalstar customers. In any financial restructuring, all partnership interests will likely be severely diluted, in which event they will have little or no value, or be eliminated entirely. The company has been able to reduce its operating expenses more rapidly than originally planned. The satellite constellation has continued to perform exceptionally well with continued very high rates of call retention and call completion.