Mobile satellite services operator Globalstar has announced that it has met all the conditions required to complete the amendments to its US$586m Coface-guaranteed senior secured credit facility.
The amended and restated Coface facility agreement became…
Mobile satellite services operator Globalstar has announced that it has met all the conditions required to complete the amendments to its US$586m Coface-guaranteed senior secured credit facility.
The amended and restated Coface facility agreement became effective 22 August 2013 and waives all existing defaults under the existing facility, postpones the first principal payment date to December 2014, defers a total of US$235.4m in principal payments through December 2019, and extends the final maturity date to December 2022.
The agreement also revises the financial covenants to correspond to Globalstar’s new business plan, reflecting the delay in delivery of its second-generation satellites.
In order to agree to these changes, the syndicate of bank lenders, comprising BNP Paribas, Credit Agricole, Credit Industriel et Commercial, Natixis and Societe Generale, stipulated that Globalstar pay a restructuring fee, increase the margin on the facility, and that Thermo Funding Company, the investment vehicle of Globalstar chairman and CEO Jay Monroe and the company’s majority shareholder, would invest a further US$85m of equity.
The investment is split between an initial investment of US$25m in July, which was used to satisfy all cash requirements associated with the company’s exchange transaction with its convertible senior noteholders. Contemporaneously, Thermo invested US$20m in the company.
A further US$20m will now be paid following the closing of the amendment agreement. Thermo has until year end to make this investment. A final US$20m must then be paid by 31 December 2014.
Under the exchange agreement, holders of the 5.75% convertible senior notes due 2028 exchanged their debt for new 8% convertible partial-PIK senior notes, also due 1 April 2028, as well as 30.4 million shares of Globalstar voting common stock and US$14m in cash.
Commenting on the completion of the transaction, Jay Monroe stated on 22 August: “We previously informed you that Globalstar expected to meet all of the conditions precedent to close this transaction during the month of August, and I am pleased to announce today that we have done just that.
“As part of the transactions completed over the past few months, Thermo has invested, or committed to invest, an additional US$85m in equity to Globalstar, demonstrating its continued commitment to Globalstar and belief in the company’s long-term growth opportunities both in the provision of mobile satellite services around the world and the potential of our unique spectrum assets.
“We intend to move forward aggressively to maximize these opportunities for the benefit of our customers and our shareholders. Once again, we would like to thank our French lending group and all advisors involved in making this transaction possible.”
In its recent Q2 2013 results, the company reported a net loss of US$126.3m, up from US$27.5m in Q2 2012. Globalstar said this was primarily due to the recognition of a non-cash loss on extinguishment of debt of US$47.2m and a non-cash loss on future equity issuances of US$14m, both connected to the debt restructuring agreements.
Quarterly revenue also fell slightly year-on-year from US$20m in 2012 to US$19.8m in 2013. However, service revenue rose by 9% to US$15.4m, predominantly due to a rise in the ARPU of its Duplex service.
Globalstar and Amazon in wireless tests
Globalstar is reportedly trialling technology with online retail giant Amazon to use its satellite spectrum in the US for a wireless network similar to WiFi.
The terrestrial low-power service (TLPS) could enable users to bypass cellular networks for the delivery of data to devices such as Kindles, according to the analyst who first broke news of the tests.
Tim Farrar, principal of TMF Associates, said: “To do that Amazon has to get a device into a huge number of homes, and hope that the higher power and longer range of TLPS (compared to unlicensed WiFi) provides widespread coverage in urban areas.”
Globalstar has been seeking regulatory permission to use its spectrum for terrestrial only services for nearly a year. On 20 June 2013, Globalstar met in person with FCC chairwoman Clyburn to present the case for its Petition for Rulemaking, and has said it expects regulators to act on this in the near future.
In a similar vein to ATC counterparts LightSquared and Dish Network, the group ultimately wants to provide LTE-based services across the entirety of its spectrum.
But it is also seeking to provide TLPS by combining the frequencies it holds in the 2.4GHz band with unlicensed Industrial, Scientific, and Medical Equipment (ISM) spectrum.
However, Farrar noted the interference concerns that have been raised by the likes of Microsoft, which could delay the plans and risk TLPS being usurped by rival technologies, such those that could utilise TV white space.
Globalstar and Amazon were unable to comment on the rumours.
