Summary
Globalstar, Inc. (GSAT) has filed an 8-K to disclose an amendment to its agreement with Hughes Network Systems, LLC. The primary focus of this amendment is the deferral of a significant payment. A scheduled payment of approximately $9.3 million, originally due in February 2011, has been extended to July 31, 2011. This extension is crucial for Globalstar, as it likely indicates the company's ongoing need for financing or cash preservation. The deferred payment will accrue interest at a rate of 10% per annum.
Key Highlights
- 1Globalstar amended its agreement with Hughes Network Systems, LLC.
- 2A payment of approximately $9.3 million, originally due February 2, 2011, has been deferred.
- 3The new payment deadline is July 31, 2011, or earlier if Globalstar secures additional financing.
- 4The deferred payment will accrue interest at 10% per annum.
- 5Failure to make the payment by July 31, 2011, allows Hughes to terminate the contract.
- 6If Hughes terminates the contract, Globalstar faces a potential $20.0 million termination payment, which can be made in cash or Globalstar common stock.
- 7If paid in stock, Hughes has the option to accept the stock or require Globalstar to conduct a block sale and remit the proceeds.