Globalstar Reaches Deal with Bond Holders; Broader Debt-restructuring Deal in the Works

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PARIS — Mobile satellite services operator Globalstar on May 20 said it has reached an exchange agreement with bond holders and is nearing a broad debt-restructuring agreement with the French export-credit agency, Coface, to give the company time to rebuild its business.

In a filing with the U.S. Securities and Exchange Commission, Covington, La.-based Globalstar, which recently launched a second-generation of 24 satellites into low Earth orbit, said the Coface agreement, once concluded, will delay most principal repayments until 2016.

The agreement with holders of Globalstar’s 5.75 percent convertible notes that callable as of April 1 and the rescheduled Coface financing were bound together because a default on the note repayment would have threatened the integrity of the Coface financial backing, which is in the form of a guarantee to a consortium of French banks.

Globalstar said it expected the new Coface terms to be concluded “as soon as possible” and would permit the company to focus on restoring its customer base of two-way voice satellite telephone subscribers thanks to the new satellites in orbit.

“We could not be more thrilled,” Globalstar chief executive and principal financial backer Jay Monroe said in a May 20 statement, adding that the amended Coface-backed loan postpones a total of $235 million in principal repayments through 2019.

The interest rate on the Coface facility will rise by 0.5 percentage points once the agreement is concluded, and by another 0.5 percentage points per year from June 2017.

The Monroe-owned Thermo group, which has been Globalstar’s principal financier in recent years, has again come to Globalstar’s aid with an initial $25 million in equity as part of the exchange of the 5.75 percent notes and an additional $60 million as part of the Coface debt rescheduling.

 

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