MSS operator Globalstar is to issue US$9.939m worth of shares to Hughes Network Systems as part of their settlement deal over milestone payments connected to the former’s second generation satellite constellation.
The number of shares that Globalstar…
MSS operator Globalstar is to issue US$9.939m worth of shares to Hughes Network Systems as part of their settlement deal over milestone payments connected to the former’s second generation satellite constellation.
The number of shares that Globalstar issues will be dependent on the price of the stock on the day before their issuance. Under the agreement, Hughes, which is a subsidiary of EchoStar, will receive a 7% discount to the trading price of the shares.
Having suffered a series of delays to the launch of its second generation LEO constellation, Globalstar sought to amend both the Coface-backed credit facility funding the new system as well as some of the contracts connected to it.
One of these was the ground segment contract with Hughes, which sees it provide ground network equipment, software upgrades and satellite interface chips for the new system. In January 2013, the companies agreed to amend the contract to revise the remaining payment and milestones to reflect the adjusted programme timeline.
The two parties then agreed to a settlement over the milestone payments in August 2013. A payment schedule for the approximate US$15.8m of deferred balances was agreed with US$5.8m due to be paid in August, US$5m in October and US$5m in December.
Globalstar has since paid around US$10.8m to Hughes in cash. The balance, plus accrued interest (which was US$4.9m as of January 2014) as well as a further milestone payment, have been paid through the issuance of US$14.4m in Globalstar stock.
A Globalstar spokesman said that this latest share issue pertains to certain future milestone payments.
