8-KMaterial AgreementsRegulation FDOther Events+1

Globalstar, Inc. 8-K Report, Material Agreement (Mar 29, 2023)

Filed March 29, 2023For Securities:GSAT

Summary

Globalstar, Inc. has announced a significant financing transaction through the issuance of $200.0 million in aggregate principal amount of 13% Senior Notes due 2029. This private placement, facilitated by Värde Partners and other purchasers, is intended to strengthen the company's financial position. The net proceeds are earmarked for repaying approximately $148 million in outstanding obligations under its 2019 Facility Agreement, covering associated fees, and for general corporate purposes. This refinancing is a crucial step for Globalstar, as it will allow for the release of existing security interests and liens tied to the 2019 Facility. Subsequently, the company will grant similar first lien security interests to its Partner to secure amounts under its Prepayment Agreement. Following these actions, Partner will disburse funds to Globalstar for payments related to the Satellite Procurement Agreement. The new Notes carry a substantial 13% annual interest rate, with flexibility in payment structure, including a significant portion that can be paid-in-kind (PIK).

Key Highlights

  • 1Globalstar issued $200.0 million in 13% Senior Notes due 2029 via a private placement.
  • 2Proceeds will be used to repay $148 million of outstanding debt under the 2019 Facility Agreement.
  • 3The transaction will result in the release of existing liens and the granting of new liens to a 'Partner'.
  • 4Funds from 'Partner' will be disbursed for payments under the Satellite Procurement Agreement.
  • 5The Notes bear a high interest rate of 13% per annum, with a split cash/PIK payment structure.
  • 6The Notes have a stated maturity of September 15, 2029.
  • 7The issue price of the Notes is 95% of the principal amount, implying a discount.

Frequently Asked Questions

The primary purpose is to refinance existing debt by repaying approximately $148 million under the 2019 Facility Agreement, and to fund related fees and general corporate purposes. This also facilitates a strategic alignment with 'Partner' regarding security interests and future payments.

The Notes have an aggregate principal amount of $200.0 million, mature on September 15, 2029, and carry a 13% annual interest rate. A portion of the interest (9%) can be paid-in-kind (PIK), meaning it can be added to the principal amount instead of being paid in cash. The issue price is 95% of the principal amount.

The issuance of the Notes will lead to the release of all security interests and liens previously granted under the 2019 Facility Agreement. Subsequently, Globalstar is required to grant substantially similar first lien security interests to its 'Partner' to secure obligations under its Prepayment Agreement.

'Partner' is a key entity involved in the financing structure. Following the refinancing of the 2019 Facility and the granting of new liens, 'Partner' will disburse funds to Globalstar to cover payments due under the Satellite Procurement Agreement. Additionally, Globalstar has agreed with 'Partner' on a specific cash/PIK interest split for the new Notes.