8-KMaterial AgreementsFinancial EventsRegulation FD+1

Globalstar, Inc. 8-K Report, Material Agreement (Jul 1, 2009)

Filed July 1, 2009For Securities:GSAT

Summary

Globalstar, Inc. (GSAT) filed an 8-K on July 1, 2009, detailing significant financial maneuvers aimed at shoring up its balance sheet and facilitating its operations. The company entered into a material definitive agreement on June 25, 2009, with Thermo Funding Company LLC, securing a $25 million loan. This funding is specifically earmarked for the debt service reserve account required under a separate Facility Agreement with BNP Paribas. The loan terms are noteworthy: it carries a 12% annual interest rate, which is capitalized into the principal, and payments to Thermo are subordinate to obligations under the Facility Agreement, with repayment contingent on the Facility Agreement's full satisfaction or specific triggers like a change in control or loan acceleration. Furthermore, on July 1, 2009, Globalstar drew down approximately $313.0 million under its previously established Facility Agreement with BNP Paribas. This drawdown, alongside the Thermo loan, signals a critical period of financing for the company. As additional consideration for the Thermo loan, Globalstar agreed to issue a warrant for 4,205,608 shares of common stock at a nominal price of $0.01 per share, subject to Nasdaq shareholder approval and ownership limitations to prevent Thermo from exceeding a 70% stake in Globalstar.

Key Highlights

  • 1Globalstar secured a $25 million loan from Thermo Funding Company LLC on June 25, 2009, to fund a debt service reserve account required by its Facility Agreement.
  • 2The loan from Thermo bears 12% annual interest, capitalized into the principal, and is subordinated to obligations under the BNP Paribas Facility Agreement.
  • 3Thermo's loan repayment is contingent upon the satisfaction of the Facility Agreement, change of control, or acceleration of loans under the Facility Agreement.
  • 4Globalstar drew approximately $313.0 million under its Facility Agreement on July 1, 2009.
  • 5As part of the Thermo loan, Globalstar agreed to issue a warrant for 4,205,608 shares of common stock at $0.01 per share.
  • 6The exercise of the warrant is subject to shareholder approval and restrictions to prevent Thermo from exceeding 70% ownership of Globalstar.
  • 7The company issued a press release on July 1, 2009, announcing the closing of the Facility Agreement.

Frequently Asked Questions

The $25 million loan from Thermo Funding Company LLC is specifically intended to fund the debt service reserve account that Globalstar is required to maintain under its Facility Agreement with BNP Paribas.

The loan carries a 12% annual interest rate that is capitalized into the principal, meaning no cash interest payments are made. Payments to Thermo are subordinated to Globalstar's obligations under the Facility Agreement and are only made when permitted. The loan matures six months after the Facility Agreement obligations are fully paid, or upon a change in control or acceleration of the Facility Agreement loans.

The warrant allows Thermo to purchase 4,205,608 shares of Globalstar common stock at $0.01 per share. This serves as additional consideration for the loan. However, its exercise is contingent upon shareholder approval and is subject to limitations to prevent Thermo and its affiliates from owning more than 70% of Globalstar's outstanding voting stock.

The drawdown of approximately $313.0 million on July 1, 2009, under the Facility Agreement with BNP Paribas indicates that Globalstar has secured substantial funding to support its operations and likely meet its immediate financial obligations under that agreement. This, combined with the Thermo loan, represents a significant financing event for the company.