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Globalstar extends forbearance agreement for 5.75% convertibles
By Jennifer Chiou
New York, April 15 - Globalstar, Inc. announced the extension of its forbearance agreement for its 5.75% convertible senior notes due 2028 to 11:59 p.m. ET on April 22 from April 15.
As reported at the beginning of the month, Globalstar entered into the agreement with holders of about 78% of the notes to give the company an opportunity to negotiate a notes restructuring.
According to a news release, the extension will allow the company to continue negotiations and documentation with noteholders. Since the forbearance was announced, the percentage of participating holders has increased to 85%.
As reported, Globalstar said previously that holders of $70.65 million, or 98.4%, of the notes exercised their rights under a prior offer to purchase the notes at par on April 1.
The company at the time said it does not have enough funds to pay this purchase price.
In addition, Globalstar failed to make a $2.06 million required interest payment on the notes for the six months ended March 31.
Failure to make the interest payment by April 30 would also constitute an event of default on the notes.
The company already said that the forbearance agreement is designed to prevent the acceleration and enforcement of the notes as a result of its failure to pay the purchase price or make the April interest payment.
If the notes obligations are accelerated, an event of default may occur under up to $675 million of other funded debt, a previous release said.
During the forbearance period, the company will not purchase any notes or pay any of the purchase price for or interest on the notes and will try to obtain the consent of senior secured credit facility lenders to a notes exchange transaction.
Based in Covington, La., Globalstar is a provider of mobile voice and data communications services via satellite.
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