Globalstar, the Bermuda-based mobile phone company that transmits calls world-wide using a collection of satellites, said this week it will reduce its staff by 50 per cent, or 175 employees, to help ensure it has enough funding to finish out the year.

The company reported second-quarter results that showed an increase in gross service revenue and net revenue, as well as in subscribers and minutes of use.

Globalstar has not paid the principal or interest on its bank loan, bonds or vendor financing agreements since January.

Globalstar has since hired The Blackstone Group to help restructure the company. Blackstone is meeting regularly with a committee of Globalstar investors, who are considering several options including pre-packaged bankruptcy, according to one person familiar with the talks.

Bernard Schwartz, chairman and chief executive officer of Loral Space & Communications, stepped down as chairman of Globalstar in May to avoid a conflict of interest.

Loral is Globalstar's largest investor, controlling about 38 per cent of the company. Mr. Schwartz is still a Globalstar director and sits on its management committee.

Global satellite telecommunications companies have been struggling to get their businesses off the ground for almost half a decade, with enormous debt, prohibitive prices and technological problems undermining the services' success.

These challenges forced both Iridium and ICO Communications, Globalstar's competitors, into bankruptcy.

Globalstar posted second-quarter gross service revenue of $2.3 million, a 13 percent increase over the previous quarter.