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3 Months : From Aug 2019 to Nov 2019
Amendment maintains current cost of senior debt and provides runway through 2022 senior debt maturity
$195 million new second lien credit facility to be funded by a strategic partner, Thermo and other investors to pay down existing debt
Existing Thermo subordinated loan to be voluntarily converted at $0.69 per share
Total net senior debt at closing of less than $150 million
Globalstar, Inc. (NYSE American: GSAT) today announced that, in consultation with the Strategic Review Committee of its Board of Directors and the Company’s financial advisors, it has decided to proceed with an amendment to the current BPIFAE Facility Agreement together with a capital raise of a new second lien credit facility. Of the two financing options disclosed in the press release on August 9, 2019, the amendment was determined to be the optimal path.
In June, the Company reached an agreement in principle on the terms of the pending amendment with the BPIFAE lenders and the requisite credit committee approvals have since been received. Additionally, the material terms of the second lien facility have been agreed. Closing of these transactions is subject to final definitive documentation and customary closing requirements and conditions. The amendment provides for (i) prepayment of the next three scheduled principal payments primarily using proceeds from the new second lien term loan facility, (ii) revisions to the remaining repayment schedule to reduce the amount of scheduled payments of principal required prior to maturity, and (iii) a reset of financial covenant levels together with an extension of the availability of the cure mechanism under the BPIFAE Facility.
The amendment is intended to improve the Company’s capital structure by fully funding the business plan through the final maturity date of the BPIFAE Facility Agreement in December 2022. In addition to providing a fully funded business plan, the amendment will allow the Company to leave in place its current cost of capital at favorable rates, reduce future amortization requirements and secure a strategic partner to provide approximately one half of the second lien facility. This partner brings significant experience to the relationship as well as collaboration opportunities with respect to various satellite and spectrum initiatives.
To support the transaction, Thermo has agreed to a voluntary conversion of the existing $127.1 million Thermo Subordinated Loan Facility at the stipulated conversion price of $0.69 per share.
The terms and economics of the second lien term loan facility are expected to be in line with the $62.0 million June bridge facility except the payable-in-kind interest shall not exceed 14% as compared to 15% in the bridge facility. The bridge facility will be repaid in full with proceeds from the second lien facility. The Company is expected to close the amendment and the second lien facility in the next 30-45 days.
Dave Kagan, Globalstar’s Chief Executive Officer, commented, "We are very excited to share this news with our investor base and partners. We have a long history with our French lenders and appreciate their partnership as we have worked to enhance the Company’s liquidity profile. The deal will fortify Globalstar’s balance sheet, bring a strong strategic partner into our capital structure, and provide us with the runway to support ongoing satellite and spectrum initiatives."
Globalstar is a leading provider of customizable Satellite IoT Solutions for customers around the world in industries such as oil and gas, transportation, emergency management, government, maritime and outdoor recreation. A pioneer of mobile satellite voice and data services, Globalstar allows businesses to streamline operations by connecting people to their devices, supplying personal safety and communication, and automating data to more easily monitor and manage mobile assets via the Globalstar Satellite Network. The Company's Commercial IoT product portfolio includes the industry-acclaimed SmartOne asset tracking products, Simplex satellite transmitters and the SPOT® product line of personal safety, asset and communication devices, all supported on SPOT My Globalstar, a robust cloud-based back office solution. Completing the satellite product suite are Duplex satellite data modems, the innovative Sat-Fi2® satellite Wi-Fi hotspot, with all product solutions offering a variety of data service plans. Learn more at Globalstar.com.
Note that all SPOT products described in this press release are the products of SPOT LLC, a subsidiary of Globalstar, which is not affiliated in any manner with Spot Image of Toulouse, France or Spot Image Corporation of Chantilly, Virginia.
Safe Harbor Language for Globalstar Releases
This press release contains certain statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Forward-looking statements, such as the statements regarding our expectations with respect to an amended BPIFAE Facility and a new second lien facility, including the terms and timing thereof, the effect of those transactions on our future business and cash needs, and other statements contained in this release regarding matters that are not historical facts, involve predictions. Any forward-looking statements made in this press release are believed to be accurate as of the date made and are not guarantees of future performance. Actual results or developments may differ materially from the expectations expressed or implied in the forward-looking statements, and we undertake no obligation to update any such statements. Additional information on factors that could influence our financial results is included in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
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Marcy Fluitt, 985-335-1525