Globalstar has agreed a deal with Hughes Network Systems that could see it issue common shares worth up to US$14.5m in lieu of cash payments. The consideration is tied to certain milestone payments under the MSS operator’s 2008 contract with Hughes for…
Globalstar has agreed a deal with Hughes Network Systems that could see it issue common shares worth up to US$14.5m in lieu of cash payments. The consideration is tied to certain milestone payments under the MSS operator’s 2008 contract with Hughes for ground network equipment, software upgrades and satellite interface chips.
After the two parties agreed to the settlement in August, Hughes exercised an option on 15 November to receive approximately US$4.3m of Globalstar’s stock.
Three days later Globalstar issued 3,166,474 shares to Hughes at US$1.35 per share in a private placement. Pursuant to the agreement, the offer price was at a 7% discount based upon a trailing volume weighted average price calculation of Globalstar’s shares.
Globalstar said that it expects to complete the share registration process by early 2014.
Having suffered a series of delays to the launch of its second generation LEO constellation, Globalstar has sought to amend both the Coface-backed credit facility funding the new system as well as some of the contracts connected to it.
The ground segment contract with Hughes is an example of this, and in January 2013 the companies agreed to amend the contract to revise the remaining payment and programme milestones to reflect the revised programme timeline.
Under the August agreement, 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.
A further US$4.3m is due as an advance payment when the next project milestone is restarted, while the company is required to pay interest worth around US$5m in
