8-KSecurities & Listing

Globalstar, Inc. 8-K Report, Unregistered Securities Sale (Dec 31, 2008)

Filed December 31, 2008For Securities:GSAT

Summary

Globalstar, Inc. (GSAT) filed an 8-K on December 31, 2008, reporting on a debt-for-equity exchange completed on December 29-30, 2008. The company exchanged approximately $28.5 million in principal amount of its 5.75% Senior Convertible Notes due 2028 for about $0.6 million in cash and 4,734,858 shares of its common stock. This transaction was executed under the Section 3(a)(9) exemption of the Securities Act of 1933, as it involved an exchange with existing noteholders without involving external brokers or commissions. The primary objective of this exchange was to deleverage the company's balance sheet and reduce interest expenses. Globalstar estimates that this move will save approximately $31 million in future interest payments. The company views this as a step towards improving its financial health and liquidity, and indicated a willingness to pursue similar exchanges opportunistically in the future.

Key Highlights

  • 1Globalstar completed an exchange of $28.5 million in 5.75% Senior Convertible Notes due 2028 for approximately $0.6 million in cash and 4,734,858 shares of common stock.
  • 2The transaction occurred on December 29-30, 2008.
  • 3The exchange is expected to reduce Globalstar's debt and interest costs by approximately $31 million.
  • 4The issuance of common stock was made under the Section 3(a)(9) exemption, signifying an exchange with existing security holders without finder's fees.
  • 5The company aims to improve its balance sheet and liquidity through this debt reduction.
  • 6Globalstar is open to executing similar debt-for-equity exchanges opportunistically in the future.

Frequently Asked Questions

The primary purpose of the debt exchange was to reduce Globalstar's outstanding debt and associated interest expenses, thereby improving its balance sheet and liquidity. The company expects to save approximately $31 million in interest costs.

Globalstar exchanged approximately $28.5 million in principal amount of its 5.75% Senior Convertible Notes due 2028. In return, they issued about $0.6 million in cash and 4,734,858 shares of its common stock.

No, the issuance of common stock was made pursuant to the exemption from registration under Section 3(a)(9) of the Securities Act of 1933. This exemption applies to exchanges with existing security holders where no commission or remuneration is paid to solicit the exchange.

Yes, Globalstar stated in the filing that they will from time to time consider entering into additional exchanges of this type on an opportunistic basis.