A view of Globalstar offices. Photo credit: Globalstar

Globalstar decided to proceed with an amendment to the current BPIFAE Facility Agreement together with a capital raise of a new second lien credit facility. Of the two financing options disclosed in the press release on August 9, the amendment was determined to be the optimal path.

In June, the Company reached an agreement in principle on the terms of the pending amendment with the BPIFAE lenders and the requisite credit committee approvals have since been received. Additionally, the material terms of the second lien facility have been agreed. Closing of these transactions is subject to final definitive documentation and customary closing requirements and conditions. The amendment provides for: prepayment of the next three scheduled principal payments primarily using proceeds from the new second lien term loan facility; revisions to the remaining repayment schedule to reduce the amount of scheduled payments of principal required prior to maturity; and a reset of financial covenant levels together with an extension of the availability of the cure mechanism under the BPIFAE Facility.

The amendment is intended to improve the company’s capital structure by fully funding the business plan through the final maturity date of the BPIFAE Facility Agreement in December 2022. In addition to providing a fully funded business plan, the amendment will allow the company to leave in place its current cost of capital at favorable rates, reduce future amortization requirements and secure a strategic partner to provide approximately one half of the second lien facility. This partner brings significant experience to the relationship as well as collaboration opportunities with respect to various satellite and spectrum initiatives.