Summary
Globalstar, Inc. (GSAT) has filed an 8-K report on October 24, 2008, disclosing a partial conversion of its outstanding 5.75% Convertible Senior Notes due 2028. A significant holder has elected to convert $30 million (20%) of these notes into common stock. This conversion is expected to result in the issuance of approximately 4.99 million shares of Globalstar common stock. Importantly, the company will also pay an "early conversion make whole" amount of roughly $4.3 million, which effectively compensates the noteholder for future interest payments. Following this event, $120 million in principal amount of these convertible notes will remain outstanding. The company anticipates substantial cash interest cost savings of approximately $30 million through the maturity of the remaining notes as a direct result of this partial conversion.
Key Highlights
- 1A holder converted $30 million (20%) of Globalstar's 5.75% Convertible Senior Notes due 2028.
- 2Approximately 4,985,440 shares of Globalstar common stock are expected to be issued upon conversion.
- 3Globalstar will pay an early conversion make whole amount of approximately $4.3 million to the converting noteholder.
- 4This make whole payment represents the value of the next five semi-annual interest payments.
- 5$120 million in principal amount of the convertible notes will remain outstanding after the conversion.
- 6The company expects to save approximately $30 million in aggregate cash interest costs through the maturity of the remaining notes.