Summary
Globalstar, Inc. (GSAT) announced a significant refinancing of its debt obligations through two key agreements filed on November 27, 2019. The company entered into a Fourth Global Amendment and Restatement Agreement (2019 GARA) to its existing facility agreement and a new $199.0 million second lien term loan facility. This strategic move aims to improve Globalstar's financial flexibility and manage its debt structure more effectively. The refinancing includes the prepayment of a substantial portion of existing debt using proceeds from the new second lien term loan, cash on hand, and reserve account reductions. Notably, the company is also receiving equity from its controlling shareholder, Thermo, through a voluntary conversion of outstanding obligations. The new terms also involve adjustments to repayment schedules, a reduction in required debt service reserves, and an equity raise requirement to address future principal payments. These changes collectively aim to provide Globalstar with a more manageable debt profile leading up to its maturity dates.
Key Highlights
- 1Globalstar entered into a $199.0 million second lien term loan facility, maturing in November 2025, with a blended interest rate of 13.5% (PIK or cash at company's option) and warrants for 7% of outstanding Voting Stock.
- 2A portion of the second lien proceeds will be used to pay off the $66.0 million outstanding Subordinated Loan Agreement from June 2019.
- 3The 2019 GARA facilitates the prepayment of $151.6 million of outstanding principal on the existing facility agreement, covering the next three scheduled principal payments and part of the fourth.
- 4The Debt Service Reserve Account balance was reduced by $10.0 million, now standing at approximately $51.0 million through maturity.
- 5The repayment schedule for the existing facility agreement has been revised, with a significant final principal payment of $109.5 million due at maturity.
- 6Globalstar is required to raise at least $45.0 million in equity by March 31, 2021, to be applied towards future principal payments.
- 7Thermo, the controlling shareholder, agreed to convert all outstanding obligations under its existing 2009 loan agreement into Voting Stock at $0.69 per share in early 2020.