What is the main purpose of this 8-K filing?

The main purpose of this 8-K filing is to announce that Globalstar, Inc. has entered into a forbearance agreement with a significant portion of its 5.75% Convertible Senior Note holders. This agreement temporarily prevents these noteholders from exercising their rights due to missed payments, allowing Globalstar time to negotiate a debt restructuring.

What events led to this forbearance agreement?

The forbearance agreement was necessitated by Globalstar's failure to make payments on its 5.75% Convertible Senior Notes due 2028. Specifically, the company failed to pay accrued interest and to purchase notes that noteholders had requested to be repurchased, both of which were due on April 1, 2013.

What are the key terms of the forbearance agreement?

The forbearance agreement allows Globalstar a limited period (April 1 to April 15, 2013) to negotiate a debt restructuring. During this time, the forbearant noteholders agree not to accelerate the notes or take other remedies for the missed payments. Globalstar agrees to use best efforts to achieve a restructuring and cover the noteholders' legal expenses for the period ending April 1, 2013.

What is the risk if Globalstar cannot reach a restructuring agreement?

If Globalstar cannot successfully negotiate and complete a debt restructuring by the end of the forbearance period, it intends to explore other restructuring and reorganization alternatives. The failure to pay the purchase price for tendered notes could also trigger defaults under other funded indebtedness, potentially up to approximately $675,000,000.

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

Summary

Globalstar, Inc. (GSAT) has filed an 8-K report detailing a material definitive agreement regarding its 5.75% Convertible Senior Notes due 2028. The company entered into a forbearance agreement with holders representing approximately 78% of these notes. This agreement, effective April 1, 2013, aims to provide Globalstar a temporary window, until April 15, 2013, to negotiate a restructuring of its indebtedness related to these notes. This action follows the company's failure to pay accrued interest and purchase tendered notes, which were due on April 1, 2013, constituting specified defaults. The forbearance agreement halts the noteholders' rights and remedies, including acceleration of the debt, during the specified period. Globalstar is actively in discussions with these noteholders for a potential debt restructuring, seeking consent from its senior secured credit facility lenders as well. However, the company explicitly states there is no assurance that a restructuring agreement will be reached or consummated. If negotiations fail, Globalstar intends to explore other restructuring and reorganization alternatives.

Key Highlights

1Globalstar entered into a forbearance agreement with holders of ~78% of its 5.75% Convertible Senior Notes due 2028.
2The agreement provides a forbearance period from April 1, 2013, to April 15, 2013, to negotiate a debt restructuring.
3The forbearance addresses the company's failure to pay interest and purchase tendered notes due on April 1, 2013, which were specified defaults.
4Noteholders have agreed not to exercise their rights and remedies, including acceleration of the debt, during the forbearance period.
5The company is actively negotiating a potential debt restructuring with noteholders, requiring consent from senior secured credit facility lenders.
6There is no guarantee that a debt restructuring agreement will be reached or successfully consummated.
7Failure to achieve a restructuring may lead Globalstar to explore other restructuring and reorganization alternatives.

Globalstar, Inc. 8-K Report, Material Agreement (Apr 1, 2013)

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Key Highlights

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