Globalstar Inc. Case 02/09/2007
The original complaint charges Globalstar and certain of its officers and directors with violations of the Securities Act. Globalstar offers satellite communications services. The Company provides mobile and fixed voice and data services, asset tracking and monitoring services, high-speed Internet access, video and audio broadcasting, and remote file transfer and virtual private networking services.
Specifically, the Complaint alleges that on or about November 2, 2006, the Prospectus (the “Prospectus”) with respect to the IPO, which forms part of the Registration Statement, became effective and, at least, 7.5 million shares of Globalstar’s common stock were sold to the public, thereby raising more than $127 million. The Prospectus failed to disclose that Globalstar’s constellation of satellites was degrading at an increasingly fast rate and the length of their commercial viability was decreasing.
The complaint further alleges that on or around February 5, 2007, Globalstar filed a Form 8-K with the Securities and Exchange Commission disclosing several material events. Among other things, the Company disclosed that it has received updated information concerning its constellation of satellites and that the satellites’ rate of degradation had accelerated. In response to the announcement about the Company’s satellites, on February 6, 2007, the price of Globalstar stock declined precipitously falling from $14.48 per share to $10.40 per share - approximately 39% below the IPO price - on extremely heavy trading volume.