Globalstar Offering Could More Than Double Its Size (GSAT)

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Globalstar Inc. (NASDAQ: GSAT) filed for a shelf registration of mixed securities this morning that would allow it to sell up to $700 million.  The registration will allow it to sell debt securities, common and preferred stock, warrants and depositary shares.

As far as the use of proceeds, Globalstar noted that a part of the proceeds will be used to meet capital expenditures relating to it procuring and deploying second-generation satellite constellation and related ground facilities.

The potential size of the offering is rather large for this company.  Its shares have been cut in half from its 52-week highs appear to be down some 60% from its late-2006 IPO.  Its market cap is now about $565 million.  On last look, the company had $57.3 million in total liabilities.

When you see shelf filings of this size, these usually are a combination of debt and stock.  It’s hard for a company to get away with diluting current shareholders by more than half.  Either way, it looks like the fully diluted share count may soon be much larger than today.

Jon C. Ogg
March 19, 2008