Summary
Globalstar, Inc. (GSAT) filed an 8-K on August 25, 2017, disclosing the unregistered sale of equity securities. The company entered into an agreement to issue approximately 26.4 million shares of its common stock in exchange for about $16 million in principal amount of its 8% Convertible Senior Notes due in 2013. This transaction effectively allows Globalstar to retire and cancel these notes, accelerating a conversion that was otherwise expected to occur by April 1, 2018. No cash proceeds were received by Globalstar in this exchange; it was a direct swap of stock for debt. The issuance was conducted under Section 3(a)(9) of the Securities Act of 1933, which exempts such exchanges with existing security holders from registration requirements, provided no commissions or remuneration are paid for solicitation. This move is strategic for Globalstar as it proactively reduces its outstanding debt by converting it into equity. The company indicated it may consider similar opportunistic exchanges in the future.
Key Highlights
- 1Globalstar issued 26,410,642 shares of common stock on August 24, 2017.
- 2The shares were issued in exchange for approximately $16 million principal amount of 8% Convertible Senior Notes from 2013.
- 3This transaction effectively retired and cancelled the outstanding convertible notes.
- 4The exchange accelerated a conversion that was otherwise expected by April 1, 2018.
- 5No cash proceeds were received by Globalstar; it was a debt-for-equity swap.
- 6The issuance qualified for an exemption from registration under Section 3(a)(9) of the Securities Act of 1933.
- 7Globalstar may pursue similar opportunistic debt-for-equity exchanges in the future.