NEW YORK, Oct. 6, 2014 /PRNewswire/ -- Kerrisdale
Capital ("Kerrisdale"), a New York
based private investment manager, announced today that it will host
a live presentation on mobile satellite services provider,
Globalstar, Inc. (NYSE: GSAT). Sahm
Adrangi, Chief Investment Officer, will debunk Globalstar's
highly misleading claims about its business and discuss why
Kerrisdale believes that Globalstar's equity value is worthless, in
contrast to the Company's current $4 billion
dollar market capitalization.
The live presentation will begin at 11:30am ET at AXA Event & Production Center
at 787 Seventh Avenue, New York.
Please arrive 15 minutes in advance to sign in. Registration for
the live webcast of the presentation can also be accessed at
kerr.co/10614. The full research report and presentation materials
are available at factsaboutglobalstar.com.
"Globalstar is the most egregious stock promotion we have come
across since Sino-Forest," says Sahm
Adrangi, Chief Investment Officer of Kerrisdale Capital.
"Globalstar's proposed paid Wi-Fi offering is nothing more than the
company's latest gimmick to stave off bankruptcy, a stunt that
rivals Allen Chan's fake forests as
the most successful stock-market fantasy we've ever come
across."
Kerrisdale believes the company is currently valued at
$4 billion due to misleading and
ill-informed publicity over the company's spectrum holdings and a
proposed licensable Wi-Fi channel currently under review by the
Federal Communications Commission. This licensable Wi-Fi channel
will never be commercially viable, and its spectrum is unusable
terrestrially in all other use cases. The combined value of the
company's unprofitable core satellite business and potential
terrestrial applications of its spectrum assets is lower than its
debt burden, making the stock a zero.
Terrestrial Low Power Service is Not Commercially
Viable
Globalstar's proposed Terrestrial Low Power Service
("TLPS") will never be commercially viable, based on
Kerrisdale's in-depth research and discussions with numerous
industry experts. In a world that already has three free,
unlicensed channels in the 2.4GHz band and an additional 22 in the
5GHz band, one more channel, hypothetically accessible to only a
circumscribed set of users, will never be worth many billions of
dollars.
Wi-Fi "Congestion" is Highly Manageable
The Wi-Fi "congestion" that Globalstar purports to address is
typically misdiagnosed and is a problem that IT professionals
routinely solve every day by using best practices and modern
technology. Kerrisdale's comprehensive report shows that network
administrators have more than enough channels at their disposal to
address co-channel interference, which would deem Globalstar's
Wi-Fi offering irrelevant.
Heavy Debt Burden and an Unprofitable Core Business
Globalstar's mobile satellite services business has more than
$500 million of outstanding net debt,
and over the twelve months ended June 30,
2014, generated just $15
million of adjusted EBITDA and negative $95 million of operating income. Since emerging
from bankruptcy in 2004, it has racked up cumulative operating
losses of $460 million, increased its
share count by a factor of 13, been de-listed from NASDAQ in 2012,
defaulted on its debt in 2013, and is likely to violate its
financial covenants again in the near future.
Kerrisdale's research report and presentation also discuss the
public's increased usage of 5GHz Wi-Fi spectrum as compared to
Globalstar's 2.4GHz Wi-Fi spectrum, consumers' relatively low
appetite to pay for Wi-Fi and a discussion of how Globalstar's
spectrum should be valued in a non-Wi-Fi use case.
Kerrisdale Capital holds short positions in Globalstar, Inc.
About Kerrisdale Capital
Kerrisdale Capital Management, LLC is a fundamentally-oriented
investment manager that focuses on long-term value investments and
event-driven special situations. Kerrisdale has $300 million in assets under management and is
based out of New York City.
Contact
Agnes Cao
Kerrisdale Capital, LLC
acao@kerrisdalecap.com
212-257-4385
SOURCE Kerrisdale Capital Management, LLC