What happened
It’s almost always good news when a company dramatically improves its financing situation. Such was the case on Tuesday with satellite specialist Globalstar (NYSEMKT: GSAT), which saw its share price rise by just under 11% thanks to a new bond sale. That increase was far higher than the incremental rise of the S&P 500 index on the day, which bumped up a comparatively light 1.4%.
So what
Globalstar, perhaps best known as the provider of satellite technology for recent model iPhones from tech superstar Apple, made its announcement before market open. It said that it has entered into a agreement to sell $200 million worth of senior notes. The buyer is alternative investment firm Värde Partners.
The notes carry an annual interest rate of 13% and mature in 2029. Globalstar said it expects to close the sale on or around this Friday, March 31.
The company said it will utilize the proceeds mainly to retire all debt stemming from a 2019 facility agreement. The total outstanding amount of these borrowings stands at roughly $148 million. The remaining funds are to be used to pay fees, and for “general corporate purposes.” Globalstar did not elaborate on the latter.
Now what
In its press release on the notes sale, Globalstar quoted its CFO Rebecca Clary as saying that the deal “is a critical step in a series of achievements over the last several months to secure our balance sheet.”
“Despite a tough capital markets environment, we were able to successfully complete this financing,” she added.
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