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GSAT > SEC Filings for GSAT > Form 8-K on 20-May-2013All Recent SEC Filings

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Form 8-K for GLOBALSTAR, INC.


20-May-2013

Entry into a Material Definitive Agreement, Creation of a Direct Financial Oblig


Item 1.01. Entry into a Material Definitive Agreement.

On May 20, 2013, Globalstar, Inc. (the "Company" or "Globalstar") announced that it had entered into an Exchange Agreement dated as of May 20, 2013 (the "Exchange Agreement") with the beneficial owners and investment managers for beneficial owners (whom we refer to collectively as the "Exchanging Note Holders") of approximately 91.5% of its outstanding 5.75% Convertible Senior Notes due 2028 (the "5.75% Notes") and completed the transactions contemplated by the Exchange Agreement. The terms of the Exchange Agreement were determined by extensive arm's-length negotiations among Globalstar and the Exchanging Note Holders. Additionally, the Company announced that it had entered into an Equity Commitment, Restructuring Support and Consent Agreement (the "Consent Agreement") with Thermo Funding Company LLC ("Thermo"), a limited liability company controlled by James Monroe III, Globalstar's principal shareholder, Chairman and Chief Executive Officer, the bank serving as facility agent, security agent and Chef de File (the "Agent") under the COFACE Facility Agreement dated as of June 5, 2009, which is the Company's senior secured credit facility (the "Facility"), and the lenders who are parties to the Facility (the "Lenders").

The Consent Agreement

In addition to the Lenders' consent to the transactions contemplated by the Exchange Agreement, the Consent Agreement, which was approved by COFACE and the Lenders' credit committees, contains a term sheet summarizing certain principal terms for the restructured Facility. Completion of the restructured Facility is subject to the execution of definitive documentation, receipt by each of the Lenders and COFACE of final credit approval and satisfaction of the conditions precedent set forth therein.

The following are among the subjects of the agreed term sheet:

The repayment schedule for the restructured Facility, which provides for aggregate postponements in principal payments of approximately $235 million through 2019;

The interest rate for the restructured Facility, which will increase by 0.5% at closing and, beginning on June 1, 2017, by an additional 0.5% each year until maturity;

Restructuring fees payable to the Lenders;

Conditions precedent to the closing of the restructured Facility, including the receipt by the Company of $45 million of equity contributions as described below and Thermo's commitment to make or arrange the balance of the capital contributions described below;

Mandatory prepayments in specified circumstances and amounts, including if the Company generates excess cash flow, monetizes its spectrum rights, receives the proceeds of certain asset dispositions, or receives more than $145 million from the sale of additional debt and equity securities (excluding the Thermo equity commitments described below and up to $19.5 million under the Company's equity line with Terrapin Opportunity Fund, L.P.);

Modifications to the financial covenants in the Facility in recognition of delays in the final delivery in space of the Company's second-generation satellites; and

Amending the Facility's definition of Change of Control to require a mandatory prepayment of the Facility if Mr. Monroe and his affiliates own less than 51% of the Company's voting common stock.

Pursuant to the Consent Agreement, Thermo agreed that it would make, or arrange for third parties to make, cash contributions to the Company in exchange for equity, subordinated convertible debt or other equity-linked securities as follows:

At the closing of the exchange transaction and thereafter each week until no later than July 31, 2013, an amount sufficient to enable the Company to maintain a consolidated unrestricted cash balance of at least $4.0 million;

At the closing of the exchange transaction, $25.0 million to satisfy all cash requirements associated with the exchange transaction, including agreed principal and interest payments to the holders of the 5.75% Notes as contemplated by the Exchange Agreement, with any remaining portion being retained by the Company for working capital and general corporate purposes;

Contemporaneously with, and as a condition to the closing of, any restructuring of the Facility, $20.0 million (less any amount contributed pursuant to the commitment described above with respect to the Company's minimum cash balance);

Subject to the prior closing of the Facility restructuring, on or prior to December 26, 2013, $20.0 million; and

Subject to the prior closing of the Facility restructuring, on or prior to December 31, 2014, $20.0 million, less the amount by which the aggregate amount of cash received by the Company under the first, third and fourth commitments described above exceeds $40 million.

In the aggregate, Thermo has agreed to fund or arrange $85.0 million of capital as described above.

The Company, Thermo, the Lenders and the Agent agreed to use commercially reasonable efforts to take any and all necessary and appropriate actions in furtherance of the consummation of a restructuring of the Facility.

The parties agreed that the Lenders may terminate the Consent Agreement if, among other things:

The restructuring of the Facility has not been consummated on or before June 28, 2013; or

The Company or Thermo materially breaches any of its representations, warranties or covenants under the Consent Agreement, which breach is not cured (if curable) within 15 days of receipt of notice by the Company or Thermo, as the case may be.

. . .



Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 of this Current Report on Form 8-K under the captions "The New Notes" and "The Consent Agreement" are incorporated into this Item 2.03 by reference.



Item 3.02. Unregistered Sales of Equity Securities.

The information set forth in Item 1.01 of this Current Report on Form 8-K under the captions "The Exchange Agreement" and "The Common Stock Purchase Agreement" are incorporated into this Item 3.02 by reference.

The exchange of the 5.75% Notes for the New Notes and common stock of the Company is being consummated pursuant to an exemption from registration under
Section 3(a)(9) of the Securities Act of 1933, as amended (the "Act"). No commission or remuneration was paid or given, directly or indirectly, for soliciting the exchange transaction contemplated by the Exchange Agreement.

The sale of shares of the Company's common stock to Thermo pursuant to the Common Stock Purchase Agreement is being consummated pursuant to an exemption from registration under Section 4(2) of the Act for transactions not involving a public offering. Thermo has agreed that the shares acquired by it are "restricted shares" and may not be transferred other than pursuant to an effective registration statement under the Act or an applicable exemption from registration.



Item 7.01. Regulation FD Disclosure.

On May 20, 2013, the Company issued a press release with respect to the transactions described above. The press release is furnished as Exhibit 99.1 to this Report.

The information in Exhibit 99.1 and in this Item shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Act or the Exchange Act.


Item. 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit
No.       Description
 4.1      Fourth Supplemental Indenture between Globalstar, Inc. and U.S. Bank,
          National Association as Trustee dated as of May 20, 2013, including Form
          of Global 8% Convertible Senior Note due 2028
10.1      Equity Commitment, Restructuring Support and Consent Agreement by and
          among Globalstar, Inc., Thermo Funding Company LLC, BNP Paribas, as
          facility agent, security agent and Chef de File under the COFACE
          Facility Agreement dated as of June 5, 2009, and the Lenders who are
          parties to the Facility, dated as of May 20, 2013
10.2      Exchange Agreement by and among Globalstar, Inc. and certain exchanging
          note holders dated as of May 20, 2013
10.3      Common Stock Purchase Agreement between Globalstar, Inc. and Thermo
          Funding Company LLC dated as of May 20, 2013
99.1      Press Release dated May 20, 2013

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