Globalstar is once again in danger of defaulting on its Coface facility, after Arianespace flagged a missed payment for launching the operator’s second-generation satellites.
If the MSS operator fails to make the payment in full by late August,…
Globalstar is once again in danger of defaulting on its Coface facility, after Arianespace flagged a missed payment for launching the operator’s second-generation satellites.
If the MSS operator fails to make the payment in full by late August, Arianespace is entitled to suspend its fourth launch of the constellation, which was due for later this year, according to an SEC filing on 10 August.
“If payment is not made within 60 days, Arianespace is entitled to terminate the contract, which would be an event of default under the facility agreement,” stated Globalstar.
This US$586.3m Coface-backed loan facility was secured back in 2009, and bears interest at a floating LIBOR rate, plus a margin of 2.07% through December 2012, increasing to 2.25% through December 2017 and 2.40% thereafter.
The dispute with Arianespace comes shortly after Globalstar settled a long-running row with Thales Alenia Space, which also threatened to see it default on the facility. Globalstar had previously warned that its dispute with the manufacturer, over contract charges, could force it into Chapter 11 bankruptcy protection.
However, despite settling the dispute on 25 June, the operator revealed in the SEC filing that Coface is investigating whether the settlement would still constitute as a default on the facility. Lenders are withholding the facility’s remaining US$3m until the French export credit agency has completed its evaluation process.
“[Globalstar] management believes that the events cited by the agent to the facility agreement are not events of default as defined by the facility agreement,” stated Globalstar.
“However, to eliminate any uncertainty regarding these events, the company and the lenders are working on an amendment and waiver with respect to each of the potential events cited which is expected to be completed promptly.”
Among the amendments Globalstar aims to make are changes to financial covenants linked to the in-orbit availability of its new satellites, which has been impacted by a series of issues, including manufacturing delays that led to the dispute with Thales.
Globalstar also revealed that, on 9 August, it was granted an extension to the date its 18 previously launched next generation birds have to achieve “in-orbit acceptance” from 1 August 2012 to 31 December 2012.
Arianespace was unable to comment before the press deadline.
