Globalstar Plans Bankruptcy Filing

Troubled satellite phone provider Globalstar announced plans to restructure its business and file for bankruptcy protection.

The San Jose-based company, which was founded by several leading telecommunications firms, said it is negotiating a deal with creditors so it can continue to provide service.

Under the bankruptcy filing expected by the end of the year, all partnership interests probably will be severely diluted, meaning they would have little value or be eliminated entirely.

Primary partners in Globalstar include Loral Space & Communications, Qualcomm Inc., China Telecom, DaimlerChrysler Aerospace and Vodafone Group.

In after-hours trading, shares of the publicly traded partner--Globalstar Telecommunications Ltd.--lost 36 cents, or 55% of their value. Before the announcement, shares closed up 4 cents, to 65 cents, on Nasdaq.

Globalstar spent more than $4 billion to develop its system of 48 satellites that allows subscribers to make and receive calls from anywhere on the planet.

As with rival Iridium, Globalstar signed up fewer customers than expected because of large handsets and expensive service. Iridium filed for bankruptcy protection in 1999.