Globalstar, Inc. secured an extension in talks with investors holding the companys 5.75 percent Convertible Senior Notes due 2028 to midnight April 29, holding off for now a default that could trigger broader financial problems for the company. The companys Spot Satellite GPS messenger service is sold by many sporting goods retailers.
Globalstar said the new deadline to its April 1 forbearance agreement will give it more time to obtain required consents from the company’s senior secured lenders regarding an exchange transaction. There is no assurance those note holders will again extend the forbearance agreement should talks fail to reach an agreement by April 29.
To secure the extension, Globalstar agreed to issue shares of its voting common stock to the forbearing note holders who have executed the most recent amendment if an exchange transaction is not consummated within five days after the end of the forbearance period.
“This extension was necessary to provide the additional time necessary to secure the proper approvals to consummate a transaction, said Jay Monroe, Globalstar’s Chairman and CEO. We look forward to a successful exchange transaction and will continue to provide updates regarding this process.”
Globalstar announced April 1 that the note holders agreed during the forbearance period not to call the notes should Globalstar fail either to repurchase them by an April 1 put date or to make its regularly scheduled April 1 interest payment. The forbearing note holders have also directed the trustee not to take any action on account of the Specified Defaults.
Globalstars other series of senior unsecured notes include cross acceleration provisions which may be triggered by an acceleration of the Existing Notes if such acceleration is not rescinded within 30 days. Accordingly, so long as the forbearance period is extended, the Existing Notes cannot be accelerated and no cross-acceleration provisions of the other series of notes will be triggered as a result of the Specified Defaults. Should the forbearance period terminate and the Company not cure the Specified Defaults, cross-acceleration would be triggered only if the Existing Notes are accelerated and the acceleration is not rescinded within 30 days.
Any exchange arrangement for the Existing Notes is subject to final negotiation and execution of definitive agreements. Globalstar is seeking the consent of the lenders under its senior secured credit facility to the restructuring; however, there is no assurance such consent will be obtained. Until definitive agreements are negotiated in their entirety and executed, and the transactions contemplated thereby are consummated, there can be no assurance that any debt restructuring will be completed by the end of the forbearance period or at all.
