Chardan Capital Downgrades Globalstar On Monetization Concerns

Mobile satellite voice and data services provider Globalstar, Inc. GSAT called off its merger with Thermo Acquisitions Aug. 1, and the company reported a $7-million loss in its second-quarter print Aug. 2. 

The Analyst

Chardan Capital's James McIlree downgraded Globalstar from Buy to Neutral. 

The Thesis

Globalstar has an annual funding gap of about $100 million, and now that the merger has been canceled, it has to find a way to fund the gap on its own, McIlree said in the downgrade note. (See his track record here.) 

The merger would have allowed the company to monetize its spectrum from a position of strength, the analyst said. 

The main reason for Chardan's downgrade is not Globalstar's funding gap, but its ability to monetize the spectrum, McIlree said.

"The acquisition would have given Globalstar the wherewithal to manage this process without constantly chasing new cash and negotiating with lenders." 

The Price Action

Globalstar shares were trading up 0.5 percent to 52 cents at the time of publication Thursday. 

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