US satellite communications company Globalstar has filed for Chapter 11 bankruptcy protection in a bid to survive liabilities of around $3.4 billion.
The low Earth orbit (LEO) satellite system operator plans to shift its assets to a new holding company owned by bond holders and unsecured creditors - effectively replacing debt with equity. The move to Chapter 11 protection has been expected since late last year.
Globalstar will continue operations, but concedes that it will need more funding to survive and is "currently in discussions with a number of possible investors". However, raising new investment will be extremely difficult. Globalstar's credit rating is now Ca - virtually the lowest form of junk bond. At present Globalstar has $46 million in cash, enough to survive for about six months.
Source: Flight International