8-KMaterial Agreements

Globalstar, Inc. 8-K Report, Material Agreement (Feb 6, 2023)

Filed February 6, 2023For Securities:GSAT

Summary

Globalstar, Inc. has entered into a Second Forbearance Agreement with Macdonald Dettwiler and Associates Corporation and Rocket Lab USA, Inc., which provides a temporary reprieve on outstanding payment obligations under existing satellite procurement and forbearance agreements. The company paid $20 million in cash as part of this agreement and has secured forbearance through March 15, 2023, by which date all remaining amounts due must be paid. This move is critical for Globalstar as it navigates its financial commitments related to its satellite program. Furthermore, the agreement introduces a potential mechanism for Globalstar to satisfy a portion of its obligations through the delivery of its common stock to the subcontractor, Rocket Lab USA, Inc., at market price, up to a maximum of $40 million. This stock payment is contingent on mutual agreement and definitive agreements. The company is actively exploring financing options for its remaining payment obligations and the refinancing of its 2019 Facility Agreement, with a stated consideration for maximizing shareholder value. Investors should monitor upcoming communications for further details on financing and potential stock issuances.

Key Highlights

  • 1Globalstar entered a Second Forbearance Agreement with Macdonald Dettwiler and Rocket Lab USA, Inc., extending payment deadlines to March 15, 2023.
  • 2A cash payment of $20 million was made towards outstanding amounts under the Satellite Procurement Agreement and prior forbearance agreements.
  • 3The agreement allows for potential settlement of up to $40 million of outstanding obligations through the issuance of Globalstar's common stock to Rocket Lab USA, Inc., subject to mutual agreement.
  • 4The potential stock payment would be at market price, adjusted for certain expenses, and would require definitive agreements including a registration rights agreement.
  • 5Globalstar is actively exploring financing options to meet its remaining payment obligations and refinance its 2019 Facility Agreement.
  • 6The company emphasizes maximizing shareholder value as a key consideration in its financing and payment strategies.
  • 7Globalstar expects to provide additional information in the coming weeks regarding its financing plans and payment resolutions.

Frequently Asked Questions

The immediate impact is that Globalstar has secured a temporary extension through March 15, 2023, to pay outstanding amounts owed to Macdonald Dettwiler and Rocket Lab USA, Inc. This provides the company with more time to arrange financing and avoid immediate default on these critical satellite procurement obligations.

Yes, the agreement includes a provision that allows for the possibility of Globalstar satisfying certain payment obligations, up to $40 million in total, by issuing its common stock to Rocket Lab USA, Inc. However, this is not guaranteed and requires further agreement from both parties, as well as the execution of definitive agreements.

Globalstar is currently exploring various financing options to meet its remaining payment obligations under the contractor agreements and to refinance its 2019 Facility Agreement. The company has not yet secured these financing arrangements but states that maximizing shareholder value is a primary consideration.

Globalstar expects to provide additional information regarding its financing and payment strategies in the coming weeks. Investors should stay tuned for further updates from the company.