Subject: [NEXTEL-1] Globalstar Secures $55 Million Funding

From: Marcel <[email-masked]>
Date: Wed, 15 Jan 2003 15:23:08 -0500

Globalstar Secures $55 Million Funding

Wed January 15, 2003
By Sinead Carew
NEW YORK (Reuters) - Investment group New Valley Corp. NVAL.O said
on Wednesday that it would invest $55 million in satellite
telephone company Globalstar saving the bankrupt company from an
almost certain death.

The proposal, which is subject to approval by the Delaware
bankruptcy court, includes $20 million debtor-in-possession
financing and another $35 million if the court approves the deal
and Globalstar emerges from bankruptcy.

Under the agreement Miami-based New Valley, which is also involved
in real estate investments, would own the majority of Globalstar
and its creditors, including founders Qualcom QCOM.O and Loral
LOR.N , and its bondholders would hold the remainder, the
companies said.

The creditors will also receive preferred shares and warrants to
buy additional equity and holders of Globalstar Telecommunications
Ltd. shares may have a limited opportunity to purchase shares, the
companies said.

If the creditors and bondholders exercise their warrants New
Valley, which is part owned by Vector Group VGR.N , would own
about a 50 percent stake. Vector Group, a holding company, owns a
controlling interest in New Valley Corp. and indirectly owns
Liggett Group Inc. and Vector Tobacco Inc.

Globalstar was set up by Loral and Qualcom in 1994 to offer
satellite-based mobile telephone services to business customers
but fell on hard times as demand for its services was much smaller
then expected.

It defaulted on loans to its founding companies in early 2001 and
filed for bankruptcy protection in February 2002.

In November Globalstar said it had only about $22.6 million cash
on hand at the end of September and that it would need
debtor-in-possession financing in order to complete the Chapter 11
process.

Globalstar's restructuring follows the high-profile failure of
another satellite telephony venture, Iridium LLC, which was
founded by Motorola MOT.N . Iridium filed for bankruptcy in 1999.
Its assets were bought for $25 million in December 2000.

New Valley did not lay out a detailed strategy for the
restructured company but its Chief Executive Bennett LeBow said he
expects the investment to allow Globalstar to expand its customer
base and move toward profitability.

LeBow was at the helm of New Valley when it bought a troubled
Western Union for $25 million in 1987. He renamed the financial
services company New Valley, which in turn filed for bankruptcy in
1993. New Valley emerged from bankruptcy in 1995 after it sold
Western Union for $1.5 billion.

New Valley last traded on the Nasdaq at $4.12 on January 13.

http://story.news.yahoo.com/news?tmpl=story&u=/nm/20030115/bs_nm/telecoms_globalstar_dc_1

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