Hughes Network Systems has once again elected to take the majority of its remaining contract payments in the form of Globalstar common stock. The MSS operator will issue US$15.5m worth of shares to Hughes and pay US$0.8m in cash as settlement.
The pair…
Hughes Network Systems has once again elected to take the majority of its remaining contract payments in the form of Globalstar common stock. The MSS operator will issue US$15.5m worth of shares to Hughes and pay US$0.8m in cash as settlement.
The pair agreed to a similar payment structure back in June 2014 when Globalstar issued US$9.939m worth of shares to Hughes. Under the agreement, Hughes, which is a subsidiary of EchoStar, receives a 7% discount to the trading price of the shares.
The stock over cash settlement is the result of the delays that occurred to the launch of Globalstar’s second generation LEO constellation. This forced the company to seek an amendment to 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 that saw Globalstar pay Hughes around US$10.8m in cash and US$9.9m in stock.
This latest share settlement covers the remaining contract payments as well as the US$1.9m contract for four custom test equipment units that was agreed in March 2015 and the US$4m for two additional Radio Access Networks that Globalstar ordered in April.
Prior to this latest share offering, Globalstar had made US$95.56m worth of payments to Hughes.
