Globalstar Seeking to Restructure Operations

Globalstar said Friday that it filed for Chapter 11 bankruptcy protection, as it had warned it would three months ago, under a restructuring plan worked out in advance with its major creditors.

Globalstar was launched in 1994 with the goal of creating a global mobile telephone system for business travelers and others but was hurt by high operating costs, heavy and unattractive handsets and the steep rates charged to customers.

The San Jose-based company said it expects operations for its 66,000 remaining customers to continue uninterrupted.

Globalstar had liabilities of $3.4 billion at the time of its filing in federal court in Delaware, spokesman Mac Jeffery said. He could not immediately provide an asset total.

The company said it had $46 million in cash but would require new investment after it emerges from bankruptcy.

Under the restructuring plan, which requires Bankruptcy Court approval, Globalstar would create a new company that would be owned by its current bondholders and other unsecured creditors.

The new entity would acquire the equity stakes held by Global partners, which include Qualcomm Inc., Vodafone Group and Loral Space & Communications Ltd.

Jeffery said shareholders in the partnership entities may get the opportunity to buy shares in the new company, which may or may not carry the Globalstar name.