What is the total amount of funding Globalstar has secured or has the option to secure through this offering?

Globalstar has raised $38 million in gross proceeds from the current issuance and has an option to purchase up to an additional $12 million of Notes and Warrants by September 15, 2011, bringing the potential total to $50 million.

What are the key terms of the Convertible Senior Unsecured Notes and Warrants?

The Notes carry a 5.0% interest rate, payable in-kind semi-annually, and are convertible into common stock at $1.25 per share. The Warrants are exercisable at $1.25 per share, and both have potential anti-dilution protection and an exercise price reset provision under certain conditions.

Are there any immediate risks or dilution concerns for existing shareholders?

Existing shareholders should be aware that the conversion of notes and exercise of warrants could dilute their ownership percentage. However, the conversion and exercise are subject to a cap of 19.9% of outstanding common stock until stockholder approval is obtained. A major shareholder has agreed to vote for this approval.

What happens if Globalstar fails to meet certain financial covenants or defaults on its obligations?

The Indenture contains standard events of default, such as failure to pay principal or interest, defaults on other material indebtedness, and judgments. Upon certain events of default, the trustee or holders of 20% of the principal amount of Notes can declare the principal and accrued interest immediately due and payable. In cases of bankruptcy or insolvency, the principal and accrued interest automatically become due.

GSAT 8-K: Material Agreements, Financial Events & More

Summary

Globalstar, Inc. has announced the entry into a Third Supplemental Indenture on June 14, 2011, related to the private placement of up to $50 million in aggregate principal amount of 5.0% Convertible Senior Unsecured Notes and warrants. As of June 20, 2011, the company has raised $38 million in gross proceeds from these offerings, with investors retaining the option to purchase an additional $12 million by September 15, 2011. These notes are convertible into common stock at $1.25 per share and are guaranteed on a subordinated basis by domestic subsidiaries. The warrants are exercisable at $1.25 per share, subject to stockholder approval and a potential reset in April 2013 if the stock price remains below the exercise price. The issuance was conducted under a private placement exemption and involves significant participation from Thermo Funding Company LLC, a major shareholder, which has agreed to vote for necessary stockholder approval. The company has also entered into a registration rights agreement to allow for the resale of these securities. While the transaction provides immediate funding, it also introduces new debt with specific conversion and repurchase provisions, along with customary covenants and events of default that investors should carefully consider.

Key Highlights

1Globalstar has raised $38 million in gross proceeds from the private placement of 5.0% Convertible Senior Unsecured Notes and warrants, with an option for an additional $12 million.
2The Notes are convertible into common stock at $1.25 per share, and the accompanying Warrants are exercisable at $1.25 per share.
3A significant shareholder, Thermo Funding Company LLC, holding 63% of common stock, has agreed to vote in favor of necessary stockholder approvals for the warrants.
4The Notes mature in December 2021 or six months after the Facility Agreement maturity, whichever is earlier, and bear interest at 5.0% payable in-kind semi-annually.
5Holders can convert Notes at their option, subject to a 19.9% cap on outstanding common stock until stockholder approval.
6The company entered into a registration rights agreement to register the Notes, Guaranty, Warrants, and underlying shares for resale.
7Customary covenants, events of default, and restrictions on further indebtedness and restricted payments are included in the Indenture.

Globalstar, Inc. 8-K Report, Material Agreement (Jun 20, 2011)

Summary

Key Highlights

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