Globalstar can rest a little easier after arranging a $200 million financing deal to shore up its balance sheet.
Globalstar earlier this week announced that it entered into a purchase agreement with an affiliate of Värde Partners and others providing for the sale of $200 million in aggregate principal amount of 13% Senior Notes due 2029.
Proceeds from the notes will be used primarily to repay all remaining amounts due under Globalstar’s 2019 facility agreement of about $148 million.
“We’re ecstatic about how it ended up and what we were able to get in today’s credit environment, which is just brutal,” Globalstar’s CFO Rebecca Clary told Fierce. For all the lenders involved, which include EchoStar and Dish Chairman Charlie Ergen, “it’s a healthy return.”
“We’re just very pleased about how everything worked out,” Clary said. “It took longer than everybody wanted,” but they still managed to pull it off in today’s credit environment. “We just thank all the people who were patient and supportive.”
In 2019, Globalstar reached a $195 million debt refinancing agreement where most of the capital came from EchoStar and Thermo, a company controlled by Globalstar Chairman Jay Monroe. Hughes Network Systems, which is owned by EchoStar, is a long-time contractor with Globalstar.
That finance deal came into play when Apple entered the picture. In September of 2022, Apple announced a $450 million investment for its Emergency SOS service, which launched in iPhone 14 models last fall. In its partnership agreement with Apple, Globalstar was required to raise additional debt capital for the construction and launch of new satellites, which will ensure continuity in service.
Globalstar, which has 48 satellites in its constellation, entered into an agreement in 2022 with Macdonald, Dettwiler and Associates Corporation (MDA) to provide 17 new satellites. Those satellites are being constructed now and are expected to launch in 2025.
The broader picture
Globalstar is a much different company than it was in 2019 because now it’s got big-time backing from Apple. That gives people more certainty about its future, but Globalstar still carries a level of risk, said satellite industry consultant Tim Farrar of TMF Associates.
“I think all in all, this is not a bad outcome for Globalstar,” he told Fierce about the financing that was announced this week. “The key thing is Apple would have approved it. As long as Apple is happy, Globalstar should be happy.”
There’s been a lot of upheaval in the satellite industry as Elon Musk’s Starlink shook up a lot of the older legacy satellite companies. Inmarsat expects its merger with U.S.-based Viasat will soon be approved. French satellite operator Eutelsat is closing in on its merger with OneWeb. This week, SES confirmed talks with Intelsat about a possible combination.
“I think now all the satellite operators are reacting,” Farrar said. Some are pushing their own low earth orbit (LEO) projects and others are bulking up through consolidation to resist the pressure from Starlink and LEOs in general, he said.
In some ways, Starlink’s success ties back to Greg Wyler and his O3b business, he said. O3b, which stood for “other 3 billion” and referred to all the people who were then unconnected, was acquired by SES in 2016 and it's now part of its O3b mPower medium earth orbit (MEO) brand.
O3b was Wyler’s earlier venture; it was founded in 2007 and he followed that up by starting OneWeb in 2012. He’s now leading E-Space, which is pursuing what it calls the world’s most sustainable LEO satellite network.
“In many ways, you could say he’s sort of responsible for the success of Elon Musk and SpaceX,” Farrar said, noting that Wyler and Musk had some discussions about a potential collaboration when OneWeb was still in an incubation stage at Google. But then Musk made a filing for Starlink and went off on his own.
“It will be interesting to see how all this plays out,” he said.