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Globalstar floats $10 million loan

The provider of satellite phone service says a U.S. bankruptcy court has approved a financing deal meant to keep it afloat while it seeks new investors.

A U.S. bankruptcy court has approved a $10 million loan meant to keep Globalstar Telecommunications, a provider of satellite phone service, afloat while it seeks new investors, Globalstar announced Friday.

Globalstar said it will immediately borrow up to $4 million, then on March 6 ask a bankruptcy judge to approve the rest of the financing.

The five lenders are Blue River Capital, Columbia Ventures, ICO Investment, Iridium Investors and Loeb Partners, according to Globalstar.

The carrier's chairman, Olof Lundberg, said the financing will buy Globalstar time to locate another buyer. The company is entertaining offers now and plans to seek court approval for one of them around April 9, Lundberg said.

Satellite phone companies were launched with much fanfare in the 1990s, but have since become symbols of billion-dollar investments gone bad. Though satellite phone users rarely experience the dropped calls or lost e-mail that cell phone users complain of, the comparatively bulky handsets and expensive calls--about $6 a minute at the time--kept many people from choosing satellite service.

Globalstar and other satellite phone companies have recently dropped the cost of phone calls to less than $1 a minute.