8-KOther Events

Globalstar, Inc. 8-K Report, Corporate Update (Jun 28, 2012)

Filed June 28, 2012For Securities:GSAT

Summary

Globalstar, Inc. (GSAT) has filed an 8-K report detailing a significant settlement agreement with Thales Alenia Space France (Thales) regarding prior commercial disputes and an arbitration award. The company has agreed to purchase six additional second-generation satellites from Thales for approximately €25 million each, with payments spread over three years post-manufacturing commencement. This agreement is contingent upon Globalstar securing necessary third-party financing, including from the Thermo companies, and entering into a formal commercial contract. The settlement also involves a substantial reduction of an arbitration award. Globalstar will pay one-third of the award to Thales, and Thales will waive the remaining two-thirds and all interest upon receipt of this payment and certain releases. The parties will also seek clarification on a €3.864 million claim related to Phase 2 satellites, with potential deferral or escrow arrangements for this amount. The agreement includes termination clauses if the new contract isn't signed by February 28, 2013, and requires consent under Globalstar's Facility Agreement.

Key Highlights

  • 1Globalstar and Thales have reached an agreement to settle prior commercial disputes and an arbitration award.
  • 2Globalstar plans to purchase six additional second-generation satellites from Thales at a fixed price of approximately €25 million per satellite.
  • 3Payment for the new satellites will be spread over approximately three years after manufacturing begins.
  • 4The settlement hinges on Globalstar securing necessary third-party financing, notably from the Thermo companies.
  • 5Globalstar will pay one-third of the arbitration award, with Thales waiving the remaining two-thirds and interest upon payment and releases.
  • 6A €3.864 million claim by Thales for Phase 2 satellites will be subject to clarification from the arbitration panel, with potential for deferred payment or escrow.
  • 7The agreement can be terminated if a new commercial contract is not signed by February 28, 2013.

Frequently Asked Questions

This 8-K filing announces Globalstar's settlement of commercial disputes and an arbitration award with Thales Alenia Space France (Thales). It also outlines the principal terms for Globalstar's purchase of six additional second-generation satellites.

Globalstar has agreed to purchase six additional second-generation satellites at approximately €25 million per satellite. The total potential cost is around €150 million. Payments are structured over approximately three years after manufacturing commences. This purchase is contingent on Globalstar securing significant third-party financing.

Globalstar will pay one-third of the arbitration award. Thales has agreed to waive the remaining two-thirds of the award and all interest, provided Globalstar makes the initial payment and provides certain releases by either December 31, 2012, or upon receipt of additional funding, whichever comes later.

Yes, the agreement is subject to several conditions. Globalstar must secure necessary third-party financing (including from Thermo companies), enter into a formal commercial contract, and obtain consent under its Facility Agreement. Both parties can terminate the settlement if the new commercial contract is not signed by February 28, 2013.