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Tuesday, October 03, 2006

Terms Set For Globalstar IPO....or is it a re-IPO?

Anyone recall a satellite cell phone provider named Globalstar? They crashed and burned, but they are back. Thanks to wars and the need to immediately communicate globally for oil and mining operations, food distribution, and international oceanic shipping the company is back and will be doing a re-IPO soon. They are even running at an operating profit level.

They filed for an IPO back in July and now it has set the terms. Here is what we said back on July 24 after the company first filed to come public with a sale of $100 Million in securities. The IPO terms are now set for 6.5 million shares at a price range of $16.00 to $18.00 per share and Globalstar will trade on NASDAQ under the "GSAT" ticker.

Globalstar secured $400 million in financing back in April from Wachovia, $200 million of which is a five-year term loan and $200 of which is a four-year revolving credit facility. In addition to its spare satellite and second-generation constellation plan announcements, Globalstar has also reported the signing of a $140 million agreement with QUALCOMM to manufacture its current and next generation handset. In February the company disclosed that it had activated its 200,000th customer unit and is located in more than 120 countries. The company claims no relation to the old Globalstar that went belly-up that used to trade under the ticker "GSTRF," but if you look at the ties in the filings it was pretty convoluted and this would be only too convenient. Companies often claim no relations because of new corporate structures and post-bankruptcy filings, yet the crumbs aren't usually too far away. They even have the "new Globalstar" in describing this.

The "first" Globalstar raised some $200 million in an IPO back in 1995, and that was some $80 million under what was hoped for. It is probably no surprise that Wachovia is the lead underwriter along with J.P.Morgan, since Wachovia did the $400 million financing. You will have to guess what the analyst will rate Globalstar as after the IPO, but I will go ahead and predict that Wachovia issues the good old conflicted Outperform rating or some equivalent call.

Thermo Capital Partners is the majority owner, based in New Orleans. They are also invloved in ventures such as Xspedius Holdings, Thermo Credit LLC, United Engines LLC, Fiberlight LLC, and others; and other holders are Columbia Ventures Corp, Banc of America Securities, and Qualcomm (QCOM). The company competes head to head with Iridium, and several other providers on the data side.

Jon C. Ogg
October 3, 2006

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