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Fiberlight +Satellite PDF Print E-mail
Tuesday, 01 May 2018 06:16

Globalstar the satellite company is merging with FiberLight, a landline company, in a $1.65 billion deal.

The merger, which is expected to close in the third quarter, will create a financially stronger company, officials said. Plans are to rename the business Thermo Companies, and keep trading the stock publicly. The deal still needs the approval of shareholders. 

Globalstar will keep its operations in Covington, said Tim Taylor, the company’s vice president of finance, business operations and strategy. More than 200 people work for the company in Louisiana and a new, larger headquarters is set to open in November.

"This will make us a much stronger company," Taylor said. "We're more committed to Louisiana than ever before."

The deal involves a merger with Thermo Acquisitions Inc., a company controlled by Jay Monroe, Globalstar's chief executive officer and executive chairman of the company's board of directors, then combining Globlastar's assets with FiberLight, 15.5 million shares of CenturyLink that Thermo has and are valued at $200 million, $100 million of cash and assets of $25 million in exchange for Globalstar common stock. Once the deal is completed, Monroe's share of Globalstar's stock will go from 58 percent to between 83 and 87 percent, depending on how the stock price.

Taking the patient approach has allowed the 59-year-old Monroe to turn his closely held Thermo Cos. into a real estate, telecommunications and financial conglomerate. Starting in 1984 with $40,000 -- the money he and his wife made from selling their home -- Monroe sold diesel engines and developed power plants and fiber optic networks.

He later became majority owner of Globalstar Inc., a satellite company he bought in bankruptcy in 2003 and wants to use to sell voice and data services to the 2 billion people who live or work in the 75 percent of the world without cellular or landline access.

It’s also made him a billionaire. He has a net worth of at least $3.2 billion, according to the Bloomberg Billionaires Index, and has never appeared on an international wealth ranking. Monroe, who tried and failed to get Warren Buffett to invest in Globalstar six years ago, said his adult children will be surprised to learn he’s amassed such a fortune.

After a spike in early trading on news of the merger, shares of Globalstar were down 10.6 percent to 65 cents a share.

By adding $400 million in equity into Globalstar, it will give the business the resources to grow further, Taylor said. This also will help Globalstar's efforts to use its satellite spectrum for a terrestrial Wi-Fi network. 

“We’ll be a much larger company and negotiating from a position of strength,” Taylor said. “This accelerates the timing of partnering on the spectrum front.”

FiberLight has about 150 employees in its Atlanta and Dallas-area offices. Plans are to continue to operate the business as a separate company under the Thermo Companies banner, Taylor said. The merger will not affect employment at FiberLight.

FiberLight owns and operates networks in more than 30 metro areas, with a concentration in Washington, D.C.-Baltimore-Northern Virginia, Atlanta across Texas and Florida. Its clients include domestic and international telecommunications, wireless, cable and cloud service providers. Thermo spun the business out of Xspedius Management Co.’s acquisition of e.spire Communications in 2005.

Thermo acquired its holdings in Monroe-based CenturyLink in November, when CenturyLink merged with Level 3 Communications. Level 3 had acquired Xspedius through a series of mergers.

Globalstar, which moved its headquarters to the north shore from California in 2010, has traveled a rocky road over the past few years but recently made some headway on its plans. 

Globalstar was established in 1991 and started commercial operations in 1999. The company started to have problems with its first generation of satellites in 2007, when constant exposure to the radiation belt around Earth started to damage an amplifier that completed the link that allowed customers to receive phone calls. That made two-way communications unreliable.

The company started designing a second generation of satellites a year in advance of the problems arising. The first batch of six satellites was launched in October 2010, but ran into delays caused by components and regulatory issues with Russian satellite launches and a vendor dispute.

The company finally completed its satellite network in August 2013, creating a clear communications network across the planet.

Globalstar petitioned the Federal Communications Commission to allow it to use its airwave spectrum license for mobile broadband internet to provide Wi-Fi in areas where the company doesn’t need satellite phone service, such as major U.S. cities and airports. The terrestrial Wi-Fi network represents a potential multibillion-dollar windfall for Globalstar.

In late 2016, the FCC gave Globalstar permission to use its satellite airwaves for mobile broadband service. The wireless spectrum the company owns can work with the chips already in smartphones and other wireless devices.

In 2017, word got out that Globalstar was pursuing a possible sale.

Recently, the outlook for the company improved. Morgan Stanley picked up stock coverage and recommended it to investors, an unusual move because of the size of the company.

Then Jason Mudrick, a New York-based investor offered to loan the company $150 million because he said the stock was deeply undervalued. Mudrick said Globalstar's satellite spectrum is a "major asset" in the coming world of super fast Wi-Fi networks.

Claude Rousseu, research director for Northern Sky Research, which tracks the satellite industry, said the merger deal will give Globalstar the cash it needs to continue the business and monetize the spectrum.

“This is a very natural thing for Thermo to do,” he said. “They’ve been the main shareholder for many years.”

The key is for Globalstar to find a way to sell the Wi-Fi spectrum outside of the United States. “There’s a huge market for that, if they can leverage themselves into international markets,” he said.