8-KMaterial AgreementsFinancial Events

Globalstar, Inc. 8-K Report, Material Agreement (Aug 6, 2013)

Filed August 6, 2013For Securities:GSAT

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.

Frequently Asked Questions

The GARA significantly restructures Globalstar's COFACE Facility by waiving existing defaults, extending principal payment deadlines through 2019 by an aggregate of $235.3 million, and extending the overall facility maturity by two and a half years. This provides Globalstar with more breathing room to manage its debt and execute its business strategy.

Yes, the annual interest rate on the COFACE Facility will increase by 0.5% upon the effective date of the GARA, and will continue to increase by an additional 0.5% each year starting June 1, 2017, potentially reaching LIBOR plus 5.75%. This represents a higher cost of borrowing.

Thermo Funding Company LLC is a key party, as they have reaffirmed their commitment to make or arrange for cash contributions of up to $40 million in exchange for equity or equity-linked securities by the end of 2014. This commitment is a condition for Globalstar to issue subsidiary guarantees on its 8% Convertible Senior Notes. Thermo's existing subordinated loan to Globalstar is also being amended to ensure it does not receive payments while the COFACE Facility is outstanding.

Yes, Globalstar paid approximately $13.9 million in restructuring and underwriting fees to the lenders on the effective date of the GARA. The remaining portion of these fees is due by December 31, 2017. Additionally, the company paid outstanding transaction expenses for the lenders.