Business Context and Reporting Period
Company: Globalstar, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: April 25, 2018 (Event Date: April 24, 2018)
Context: Globalstar entered into a definitive Merger Agreement to acquire assets from Thermo Acquisitions, Inc., a company controlled by Globalstar's Executive Chairman and CEO, Jay Monroe. The transaction was unanimously recommended by an independent Special Committee and approved by the full Board of Directors.
Key Financial Metrics and Transaction Terms
Transaction Value: Approximately $1.645 billion in Globalstar common stock (voting or non-voting), subject to adjustments.
Consideration Mechanism: Share price based on the 20-day volume-weighted average market price prior to closing, with a collar of 80% to 120% based on the 20-day average prior to the signing date (April 24, 2018).
Assets to be Acquired:
- Over 99% of the equity interests of FiberLight, LLC (FBL).
- $100 million in cash.
- 15.5 million shares of CenturyLink, Inc. (CTL) common stock.
- Property and improvements in Covington, Louisiana ("Subject Property").
- Development and construction contracts related to the Subject Property.
- Cash necessary to finalize Subject Property development.
- Minority interests in Pivotal Commware, Inc. and Orion Labs, Inc.
Material Changes and Debt Restructuring
Debt Facility Amendments:
- Globalstar: Reached an agreement in principle with lenders to amend its BPIFAE senior debt facility. Proposed terms include annual principal amortization deferrals up to $30 million and a fixed margin of 3.25% over 6-month LIBOR, subject to liquidity tests. Final terms require lender approval and binding documentation.
- FiberLight: Seeking an amendment to its $255 million senior debt facility with CoBank to secure additional financing capacity for project backlog. FiberLight requests retention of a 1% annual principal amortization rate. Approval is subject to CoBank consent.
Guidance, Risks, and Contingencies
Closing Conditions: The Merger is subject to customary conditions, including the completion of amendments with Globalstar and FiberLight's lenders, and stockholder approval via a Proxy Statement/Prospectus (to be filed on Form S-4).
Risks and Uncertainties:
- Ability to consummate the transaction and satisfy closing conditions.
- Potential legal or regulatory proceedings.
- Completion and results of the 2017 FiberLight audit.
- Adjustments to merger consideration based on FBL's Adjusted EBITDA.
- Forward-looking statements regarding integration benefits and future performance are subject to significant risks.
Investor Verification Checklist
- Verify the final terms of the Globalstar BPIFAE and FiberLight CoBank debt amendments, as they are currently agreements in principle or requests subject to lender approval.
- Review the upcoming Proxy Statement/Prospectus (Form S-4) for detailed transaction terms and stockholder voting procedures.
- Monitor the 20-day volume-weighted average share price of Globalstar stock to determine the final number of shares issued in the transaction.
- Confirm the results of the 2017 FiberLight audit and the final calculation of FBL's Adjusted EBITDA for the 12 months preceding closing.
- Assess the impact of the 80%-120% collar on the transaction value relative to the signing date share price.