Summary
Globalstar, Inc. has entered into a Subordinated Loan Agreement for $62 million, effective June 28, 2019, with Thermo Funding Company LLC and other unaffiliated lenders. This new loan is intended to fund a scheduled payment under the Company's existing Facility Agreement with BNP Paribas and others. Notably, the debt to these new lenders is subordinated to Globalstar's existing obligations under the Facility Agreement, meaning they get paid after the primary lenders. The terms of the new loan include a 15% annual interest rate, which will be capitalized (added to the principal) rather than paid in cash. Payments are contingent on the Facility Agreement's provisions. A key covenant requires Globalstar to use its best efforts to refinance both the new loan and its existing facility debt within a specified timeframe. If refinancing doesn't occur within 120 days, Globalstar must facilitate the issuance of registered warrants to the lenders. The Board of Directors has deemed this a 'Permitted Financing' under the company's charter.
Key Highlights
- 1Globalstar secured a new $62 million subordinated loan facility.
- 2The new loan's primary purpose is to meet a scheduled payment under an existing Facility Agreement.
- 3Interest on the new loan accrues at 15% per annum and is capitalized, not paid in cash.
- 4The new debt is subordinate to Globalstar's existing obligations under the Facility Agreement.
- 5The company is obligated to use best efforts to refinance the new loan and potentially the existing facility.
- 6Failure to refinance within 120 days triggers a requirement to issue registered warrants to lenders.
- 7The new loan matures on December 31, 2023, or upon acceleration.