Summary
Globalstar, Inc. (GSAT) filed an 8-K on April 16, 2008, detailing two significant financing transactions that closed on April 15, 2008. The company successfully raised $135 million through the sale of 5.75% Convertible Senior Notes due 2028. A portion of the proceeds, approximately $23 million, was placed in an escrow account to cover the initial six interest payments on these notes, providing a layer of security for investors. These notes are senior unsecured debt, maturing in 2028, and are convertible into Globalstar's common stock. Concurrently, Globalstar entered into a share lending agreement and an equity underwriting agreement, allowing for the sale of up to 36,144,570 shares of its common stock. Notably, Globalstar will not receive proceeds from this stock sale, only a nominal lending fee. The proceeds from the common stock offering will go to Merrill Lynch International. This dual-track financing aims to strengthen Globalstar's financial position while also facilitating a public offering of its shares.
Key Highlights
- 1Globalstar raised $135 million in aggregate principal amount through the issuance of 5.75% Convertible Senior Notes due 2028.
- 2A portion of the note offering proceeds ($23 million) was placed in an escrow account to secure the first six interest payments.
- 3The Notes are convertible into Globalstar's Common Stock at an initial rate of 166.1820 shares per $1,000 principal amount, subject to adjustments.
- 4Holders have the option to require Globalstar to repurchase the Notes on specific dates (2013, 2018, 2023) or upon a 'fundamental change'.
- 5Globalstar entered into a share lending and underwriting agreement to facilitate the sale of up to approximately 36.1 million shares of its common stock.
- 6Globalstar will receive only a nominal fee for lending the shares; proceeds from the common stock sale will benefit the borrower, Merrill Lynch International.