Summary
Globalstar, Inc. (GSAT) has filed an 8-K detailing a significant restructuring of its senior secured credit facility (the "COFACE Facility") and its loan agreement with Thermo Funding Company LLC. This filing is crucial for investors as it addresses the company's existing defaults, extends debt maturities, and outlines future financial commitments. The key takeaway is the amendment and restatement of the COFACE Facility, which waives all existing defaults, pushes principal payments totaling $235.3 million through 2019, and extends the facility's term by two and a half years. Additionally, interest rates will increase incrementally, and mandatory prepayments are expanded. Thermo Funding Company LLC has reaffirmed its commitment to provide up to $40 million in equity or equity-linked securities by the end of 2014, which is a condition for certain subsidiary guarantees. This restructuring aims to provide Globalstar with financial flexibility and time to execute its revised business plan, particularly in light of delays with its second-generation satellites.
Key Highlights
- 1Globalstar has entered into a Global Deed of Amendment and Restatement (GARA) to amend and restate its existing $586.3 million senior secured credit facility (COFACE Facility).
- 2The GARA waives all existing defaults under the COFACE Facility, providing immediate relief from potential covenant breaches.
- 3The maturity date of the COFACE Facility has been extended by two and a half years, with an aggregate of $235.3 million in principal payments postponed through 2019.
- 4Interest rates on the COFACE Facility will increase by 0.5% upon effectiveness and by an additional 0.5% annually from June 1, 2017, up to LIBOR plus 5.75%.
- 5Thermo Funding Company LLC committed to contributing up to $40 million in equity or equity-linked securities by the end of 2014, a condition for subsidiary guarantees on 8% Convertible Senior Notes.
- 6The company paid approximately $13.9 million in restructuring and underwriting fees to lenders on the effective date, with the balance due by December 31, 2017.
- 7The agreement includes expanded mandatory prepayments related to excess cash flow, spectrum monetization, asset dispositions, and significant debt or equity issuances, excluding certain Thermo commitments.