Globalstar’s board of directors has recommended increasing the number of authorised shares of common stock as well as limiting the voting power in the election of directors of Thermo Capital Partners, the company’s largest shareholder which is…
Globalstar’s board of directors has recommended increasing the number of authorised shares of common stock as well as limiting the voting power in the election of directors of Thermo Capital Partners, the company’s largest shareholder which is controlled by CEO Jay Monroe.
In an SEC filing, Globalstar stated: “The proposed increase in authorised stock will make it possible for us to meet our existing contractual obligations without causing a change in control under other agreements and to provide for additional shares of common stock that would be available for issuance from time to time for corporate purposes, including restructuring outstanding debt, raising additional capital, or securities convertible into common stock.”
Under the terms of the amendment, the total number of authorised shares of capital stock will be increased to 1.7 billion, split between 1.6 billion shares of common stock and 100 million preferred shares, which remain unchanged.
Monroe, via Thermo, currently holds approximately 232.4 million shares of voting common stock and 135 million shares of non-voting common stock representing approximately 65% of the voting rights and 75% of the equity of the company.
The move comes just days after Globalstar entered into a forbearance agreement with 78% of its 5.75% convertible senior noteholders in order to give the company time to agree to a restructuring of the debt.
The reason for the forbearance agreement stems from Globalstar failing to have sufficient cash to fund the mandatory offer to purchase approximately US$70.65m of the notes that were tendered on 29 March. The company also failed to make the required interest payment of US$2.064m on the notes for the six months ended 31 March, 2013.
The satellite operator now has until 15 April to negotiate and complete this restructuring, although it also requires the consent of the lenders under its US$675m Coface-guaranteed senior secured credit facility.
