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[Satellite News 03-27-09] Iridium CEO Matt Desch and Inmarsat CEO Andy Sukawaty joined forces in their criticism of Globalstar CEO Jay Monroe and his company’s $574 million financing award from France’s export credit agency, Coface, on the MSUA-6 opening session panel of mobile satellite sector (MSS) CEOs.
“Congratulations to Jay. He’s a bit cheerier now than he was when we were here last year, but this financing is unusual. … It’s a bailout,” said Desch.
From the very beginning of the “What’s Next for the Mobile Satellite Industry?” panel, Monroe repeatedly defended his company’s move. “This is not a government subsidy in any way. This is a senior credit facility that has to be repaid with interest equivalent to the funding that Sirius XM received from Liberty Media. This is a natural move for us and strategic for the French government,” said Monroe.
Commenting on criticism over how the deal may put U.S. manufacturers at a disadvantage since the funding supports French manufacturer Thales Alenia Space, which has contracts with the U.S.-based Globalstar, Monroe said that he, like his colleagues, is a “commercial animal” and will look for the best deal regardless. “The outcome of this financing is seminal for our industry, and is not exclusive for us,” Monroe said.
While other CEOs on the panel admitted that they would accept such a deal if they were offered it and depending on if they needed the cash, Sukawaty raised suspicions over the terms of the financing. “While, in a sense, it’s a good deal for Globalstar, I don’t understand how or why they received this funding. Globalstar isn’t the type of business with revenues that merit a senior credit loan like this. To not call this a government subsidy — as they say in the United Kingdom — is a bit cheeky,” he said.
Michael Corkery, acting CEO of ICO, said that while his company was not looking for financing, he is ready to meet with any potential investor. “If I could get credit like what Globalstar got, I would take it,” he said.
Desch took a shot at Corkery’s response. “Well, Mike, you have a much more immediate need for credit. I will have to say that capital at these interest rates is not only good for Globalstar but good for the whole MSS industry. It opens up the possibility of future funding opportunities if we need it.”
Orbcomm CEO Marc Eisenberg brought up U.S. manufacturers in his criticism of the deal. “We chose a U.S. manufacturer for our satellites and received $20 million in credit. Our satellites are also smaller and more efficient, but power to Jay and his company for his deal,” said Eisenberg.
Criticism was not only heard from Globalstar’s competitors but from other sectors as well. Shortly after the funding was announced, Intelsat CEO Dave McGlade told the audience at the SATELLITE 2009 opening panel of fixed satellite services (FSS) CEOs, that government interference of commercial markets would distort competition, especially in Europe. “It’s bad for competition and is unfair to the companies that receive no funding,” said McGlade.
“Congratulations to Jay. He’s a bit cheerier now than he was when we were here last year, but this financing is unusual. … It’s a bailout,” said Desch.
From the very beginning of the “What’s Next for the Mobile Satellite Industry?” panel, Monroe repeatedly defended his company’s move. “This is not a government subsidy in any way. This is a senior credit facility that has to be repaid with interest equivalent to the funding that Sirius XM received from Liberty Media. This is a natural move for us and strategic for the French government,” said Monroe.
Commenting on criticism over how the deal may put U.S. manufacturers at a disadvantage since the funding supports French manufacturer Thales Alenia Space, which has contracts with the U.S.-based Globalstar, Monroe said that he, like his colleagues, is a “commercial animal” and will look for the best deal regardless. “The outcome of this financing is seminal for our industry, and is not exclusive for us,” Monroe said.
While other CEOs on the panel admitted that they would accept such a deal if they were offered it and depending on if they needed the cash, Sukawaty raised suspicions over the terms of the financing. “While, in a sense, it’s a good deal for Globalstar, I don’t understand how or why they received this funding. Globalstar isn’t the type of business with revenues that merit a senior credit loan like this. To not call this a government subsidy — as they say in the United Kingdom — is a bit cheeky,” he said.
Michael Corkery, acting CEO of ICO, said that while his company was not looking for financing, he is ready to meet with any potential investor. “If I could get credit like what Globalstar got, I would take it,” he said.
Desch took a shot at Corkery’s response. “Well, Mike, you have a much more immediate need for credit. I will have to say that capital at these interest rates is not only good for Globalstar but good for the whole MSS industry. It opens up the possibility of future funding opportunities if we need it.”
Orbcomm CEO Marc Eisenberg brought up U.S. manufacturers in his criticism of the deal. “We chose a U.S. manufacturer for our satellites and received $20 million in credit. Our satellites are also smaller and more efficient, but power to Jay and his company for his deal,” said Eisenberg.
Criticism was not only heard from Globalstar’s competitors but from other sectors as well. Shortly after the funding was announced, Intelsat CEO Dave McGlade told the audience at the SATELLITE 2009 opening panel of fixed satellite services (FSS) CEOs, that government interference of commercial markets would distort competition, especially in Europe. “It’s bad for competition and is unfair to the companies that receive no funding,” said McGlade.
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