indefinitely suspended the principal and interest payments on its debt, as well as dividends on its preferred stock, in order to maintain available funding for its marketing and service activities.
The satellite phone company is halting payments on its credit facility, vendor financing agreements and senior notes in an attempt to guarantee the continuation of its communications service and worldwide deployment. Globalstar is a partnership of several telecommunications companies, including
Loral Space & Communications
. The company estimated that the suspension of payments will save around $400 million in 2001.
Globalstar, which had $195 million in cash on hand as of Dec. 31, said the decision wouldn't affect its ability to meet its obligations to employees, customers and trade suppliers. The company also said it would relieve its partners of their commitments to provide additional funding to Globalstar.
In October, Globalstar reported
a third-quarter loss of $211.2 million, and reports began swirling that Loral would cut off new financial support for the venture, in which it owns a 40% stake.
Shares of Globalstar lost 84 cents, or 44.3%, to $1.09 in recent