US mobile satellite operator Globalstar has agreed a deal that could see it sell up to US$75m of voting common stock to investment fund Terrapin Opportunity over the next two years.
The price, net of commissions that the operator has agreed to pay, will…
US mobile satellite operator Globalstar has agreed a deal that could see it sell up to US$75m of voting common stock to investment fund Terrapin Opportunity over the next two years.
The price, net of commissions that the operator has agreed to pay, will be at a 2.75-4% discount of the average share price when and if the operator decides to sell.
Further terms will be disclosed in future prospectuses. Globalstar CEO Jay Monroe said on a results call that, apart from the improved pricing, the structure will be similar to the US$30m two-year facility it secured with Terrapin back in 2013. That had a discount range of 3.5% to 8%.
Financial West Group is acting as placement agent for the new agreement. Thermo Capital Partners, Monroe’s private equity firm and Globalstar’s largest shareholder, has also committed a US$30m backstop for it.
The deal will raise about US$72.5m after discounts and expenses if fully exercised, boosting Globalstar’s cash reserves as the FCC nears a decision on whether it can use some of its satellite spectrum for terrestrial purposes.
The regulator issued an NPRM on the MSS operator’s Terrestrial Low Power Service (TLPS) plans in late 2013, and a favourable ruling could give the group a new business line for servicing growing consumer demand for wireless broadband. Globalstar hopes to repurpose some of its satellite spectrum in the 2.4GHz band to provide a terrestrial LTE-based service that would increase the available Wi-Fi capacity in the US.
Monroe said yesterday that the proceeding has been “very active over the past few months”, although he noted that Washington is now going through a quiet period.
Globalstar posted US$23m in Q2 2015 revenues, compared with US$24m for Q2 2014. It said increased service revenue resulting from a 12% rise in subscribers was offset by a fall in equipment sales. Adjusted EBITDA was US$3.2m for Q2 2015 and US$5m for the corresponding period last year.
The results came a week after the group slammed security start-up Synack for being wrong and “self-serving”, after it alleged possible flaws in the operator’s network in a Wired article.
Synack researcher Colby Moore was cited claiming vulnerabilities that would enable hackers to compromise satellite-based asset tracking.
Globalstar said: “Many claims by Synack are simply incorrect, self-serving or misinterpret key information. Like an auto mechanic who discloses a minute problem in a car that he proposes to repair for a substantial price, the Synack representative uses a Rube Goldberg type of analysis and doomsday language to make something appear to be a vulnerability when it is not.”
