Globalstar Announces Agreement Changes and Equity Sales

TL;DR

Globalstar terminated an old deal, signed a new one, took on debt, and sold stock.

AI Summary

Globalstar, Inc. reported on October 29, 2024, the termination of a material definitive agreement and entered into a new one. The company also disclosed the creation of a direct financial obligation and unregistered sales of equity securities. These events are part of the company's ongoing financial and contractual activities.

Why It Matters

This filing indicates significant shifts in Globalstar's contractual obligations and potential dilution from equity sales, which could impact its financial structure and stock value.

Risk Assessment

Risk Level: medium — The termination of a material agreement, creation of new financial obligations, and unregistered equity sales introduce financial and operational risks.

Key Players & Entities

• Globalstar, Inc. (company) — Registrant
• October 29, 2024 (date) — Date of earliest event reported
• Delaware (jurisdiction) — State of Incorporation
• 1351 Holiday Square Blvd. (address) — Principal Executive Offices
• Covington, LA (location) — Principal Executive Offices City and State

FAQ

Key Financial Figures

• $0.0001 — ich registered Common Stock, par value $0.0001 per share GSAT NYSE American Indicate
• $1.1 billion — e "Infrastructure Prepayment") of up to $1.1 billion as further described under Item 2.03 be
• $400 million — representing a 20% equity interest, for $400 million to be paid upon the closing which is cu
• $30 million — lso provide for certain service fees of $30 million annually to be accelerated. Certain O
• $219 million — amount outstanding of the 2029 Notes of $219 million plus make-whole fees of $13 million, pu
• $13 m — of $219 million plus make-whole fees of $13 million, pursuant to the terms of the 202

Filing Documents

• gsat-20241029.htm (8-K) — 41KB
• 0001366868-24-000105.txt ( ) — 166KB
• gsat-20241029.xsd (EX-101.SCH) — 2KB
• gsat-20241029_lab.xml (EX-101.LAB) — 21KB
• gsat-20241029_pre.xml (EX-101.PRE) — 12KB
• gsat-20241029_htm.xml (XML) — 3KB

01 Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement. Services Agreements As previously disclosed, Globalstar, Inc. (the "Company" or "Globalstar") is party to a terms agreement (as amended, the "Terms Agreement") with its customer, Apple Inc. (together with its Related Entities (as defined in the Terms Agreement), "Customer"), which Terms Agreement (together with certain related ancillary agreements, the "Services Agreements") contains terms and conditions governing the development, launch and operation of Satellite Services (as defined in the Terms Agreement). Reference is made to the prior disclosures with respect to the Services Agreements in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024 and the Company's Current Reports on Form 8-K filed with the Securities and Exchange Commission (the "SEC") on February 28, 2023 and September 7, 2022 (collectively, the "Prior Disclosures"). Extended MSS Network On October 29, 2024, the Company and Customer agreed to make certain amendments to the Services Agreements and entered into other related agreements (collectively, the "Updated Services Agreements") for Globalstar to deliver expanded services to Customer over a new mobile satellite services ("MSS") network, including a new satellite constellation, expanded ground infrastructure, and increased global MSS licensing (the "Extended MSS Network"). The Extended MSS Network will be owned by Globalstar Licensee, LLC, together with its subsidiaries (collectively, the "Globalstar SPE"), and operated by the Company. As set forth below, Customer will prepay for certain services to be delivered by the Company to Customer's end users utilizing the Extended MSS Network and will be a passive equity holder in Globalstar SPE. The Globalstar SPE will hold certain network assets necessary for the Extended MSS Network and will not have commercial ope

02 Termination of a Material Definitive Agreement

Item 1.02 Termination of a Material Definitive Agreement. The Company will use a portion of the cash proceeds received from Customer, as described in Item 1.01 above, for the Current Debt Repayment, consisting of the aggregate principal amount outstanding of the 2029 Notes of $219 million plus make-whole fees of $13 million, pursuant to the terms of the 2029 Notes, and to discharge the related Indenture, dated as of March 31, 2023, by and among the Company, the subsidiary guarantors party thereto and Wilmington Trust, National Association, as trustee.

03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. The information set forth in Item 1.01 above with respect to the 2024 Prepay Agreement is incorporated in this Item 2.03 by reference. Globalstar will use the proceeds from the Infrastructure Prepayment and sale of the Customer Class B Units to fund the capital requirements for the Extended MSS Network. As the Company receives proceeds from the Infrastructure Prepayment, the Company will record a liability on its balance sheet for its obligation to perform future services to Customer. In addition to other service fees, as Globalstar provides the new services, the Company will receive additional service fees and will use these fees to fully pay down the Infrastructure Prepayment liability as well as to repurchase or redeem all Customer Class B Units over time. The full paydown of the 2024 Prepay Agreement and the redemption of the Customer Class B Units are expected to be completed within the design useful life of the new satellites. The Company expects that such amounts payable to Customer will be set off with amounts payable by Customer. The Current Debt Repayment and a portion of the Infrastructure Prepayment may accrue annual fees, as provided in the 2024 Prepay Agreement. Such fees payable to Customer will be reduced or eliminated entirely if the Company meets certain defined milestones.

02 Unregistered Sales of Equity Securities

Item 3.02 Unregistered Sales of Equity Securities. If the Company or the Globalstar SPE, as applicable, either does not have sufficient cash or accounts receivable from Customer to timely consummate, or does not otherwise timely consummate, the purchase or redemption of Customer Class B Units from Customer after full repayment of the Infrastructure Prepayment, Customer will be entitled, upon notice to the Company, to require the Company to purchase all (or a portion) of such Customer Class B Units in exchange for shares of common stock of the Company based on a five day average volume weighted price ending on the trading day immediately prior to the date of such notice. The issuance of such shares of Company common stock to Customer would not be registered under the Securities Act of 1933 (the "Securities Act"), in reliance on the exemption from registration pursuant to Section 4(a)(2) of the Securities Act. The information set forth in Item 1.01 above is incorporated in this Item 3.02 by reference.

01 Regulation FD Disclosure

Item 7.01 Regulation FD Disclosure. In the first annual period following the launch of the expanded Satellite Services, the Company estimates that its total annual revenue is expected to be more than double 2024 annualized levels with an improved EBITDA margin. Excluded from these numbers is upside from, among other areas, terrestrial spectrum and XCOM RAN, which, by their nature are difficult to precisely forecast. The Company remains focused on successfully executing on terrestrial opportunities in addition to driving growth through the monetization of available satellite capacity. There is no assurance that the Company will receive all of the revenue estimated or expected under the Updated Services Agreements. The assumptions and estimates of the Company's future performance, financial condition and liquidity are necessarily subject to uncertainty and risk due to a variety of factors, including, without limitation, those described under Item 1A. Risk Factors of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and in the Company's other filings with the SEC and as further described under "Forward-Looking Statements" below. The Company will host an in-person investor day in December 2024 to provide additional details and updates on its competitive strengths and business strategy and answer questions from investors and analysts. The information in this Item 7.01 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act"), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any Company filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Forward-Looking Statements

Forward-Looking Statements Certain statements contained in or incorporated by reference into this Current Report on Form 8-K, other than purely historical information, including, but not limited to, statements regarding the Satellite Services and other terms, conditions and matters under the Terms Agreement, the 2024 Prepay Agreement and the other Services Agreements and Updated Services Agreements, expectations and timing regarding the Satellite Services (and the related construction and launch agreements), expectations regarding sources or set off of payment of obligations, and expectations regarding future revenue, financial performance, financial condition, liquidity, projections, estimates and guidance, and the assumptions upon which those statements are based, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," "plan," "may," "could," "should," "will," "would," "will be," "will continue," "will likely result," and similar expressions, although not all forward-looking statements contain these identifying words. These forward-looking statements involve predictions and are based on current expectations and assumptions that are subject to risks and uncertainties. We caution readers that forward-looking statements are not guarantees of future performance and actual results may differ materially from those anticipated, expected, projected or assumed in the forward-looking statements. Risks and uncertainties that could cause or contribute to such differences include, without limitation, those described under Item 1A. Risk Factors of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and in the Company's other filings with the SEC. The Company undertakes no obligation to update any of the forward-looking statements after the date

SIGNATURES

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. GLOBALSTAR, INC. /s/ Rebecca S. Clary Rebecca S. Clary Chief Financial Officer (Principal Financial Officer) Date: November 1, 2024

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View this 8-K filing on SEC EDGAR