Summary
Globalstar, Inc. (GSAT) announced on June 21, 2011, that it entered into a material definitive agreement for the private placement of up to $50 million in aggregate principal amount of 5.0% Convertible Senior Unsecured Notes and accompanying warrants. As of the filing date, the company had already raised $38 million in gross proceeds from these offerings, with an option for investors to purchase an additional $12 million by September 15, 2011. The Notes are convertible into common stock at an initial price of $1.25 per share and are guaranteed by most domestic subsidiaries on a subordinated basis. Warrants allow the purchase of up to 20 million shares of common stock at $1.25 per share, exercisable for five years after issuance, subject to stockholder approval and a potential reset provision. This financing provides Globalstar with crucial capital, though the terms indicate potential future dilution through the conversion of notes and exercise of warrants, as well as an anti-dilution clause. The company has also entered into a registration rights agreement to facilitate the resale of these securities. The issuance is exempt from registration under Section 4(2) of the Securities Act, with investors representing themselves as accredited. A significant investor, Thermo Funding Company LLC, holding approximately 63% of outstanding common stock, has agreed to vote in favor of necessary stockholder approval for warrant conversion.
Key Highlights
- 1Globalstar raised $38 million in gross proceeds from the private placement of 5.0% Convertible Senior Unsecured Notes and Warrants, with an option to raise an additional $12 million.
- 2The Notes are convertible into common stock at an initial price of $1.25 per share, and the Warrants allow for the purchase of 20 million shares at $1.25 per share.
- 3The securities issuance is subject to stockholder approval for full conversion/exercise of warrants, with a major shareholder (Thermo Funding Company LLC) committed to voting in favor.
- 4The Notes mature in December 2021 or six months after the Facility Agreement maturity, whichever is earlier, and bear interest payable semi-annually in-kind at 5.0% per annum.
- 5The Warrants include anti-dilution protection and a potential reset of the exercise price if the stock price is below $1.25 in April 2013.
- 6The issuance of Notes, Guaranty, and Warrants was made under an exemption from registration pursuant to Section 4(2) of the Securities Act, with investors confirming accredited investor status.
- 7The company has entered into a Registration Rights Agreement, obligating them to register the resale of the offered securities, with penalties for delays in filing and effectiveness.