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2 Months : From Aug 2019 to Oct 2019
By Andrew Scurria and Drew FitzGerald
Billionaire Charlie Ergen is placing another wager on satellite communications with a debt investment in Globalstar Inc., according to people familiar with the matter, following a recent deal that would arm his Dish Network Corp. with assets to build a new 5G cellphone network.
Globalstar, which settled a bruising court fight with minority shareholders in December, said Thursday it struck a deal to raise $195 million to cover coming debt payments and alleviate a cash crunch.
Most of the capital, in the form of junior debt, is coming from EchoStar Corp., the Dish sister company controlled by Mr. Ergen, as well as from a company controlled by Globalstar Chairman Jay Monroe, the people familiar with the matter said.
Globalstar didn't identify EchoStar as an investor in the Thursday announcement but referenced a strategic partner that "brings significant experience to the relationship as well as collaboration opportunities with respect to various satellite and spectrum initiatives."
An EchoStar spokeswoman declined to comment.
Mr. Ergen is the chairman of Dish, the country's No. 2 satellite-TV operator behind AT&T Inc.'s DirecTV. He is also chairman of EchoStar, the owner of Dish's satellite fleet. The pay-TV business has faced pressure in the U.S. as customers opt for cheaper and more flexible online streaming video services.
Under Thursday's deal, lenders under a credit facility with French export credit agency BPI France Assurance Export SAS will extend their debt maturity to 2022 while Mr. Monroe would swap $127 million in loans to equity. Those terms aren't yet final and could change in the coming weeks, one of the people said.
The money from EchoStar and Thermo Cos., a company controlled by Mr. Monroe, Globalstar's majority owner, would pay off a $62 million bridge loan that Globalstar took out from shareholders in June while it negotiated a broader refinancing to address liquidity concerns and improve its debt profile. Proceeds also will cover the next three payments on the BPIFAE credit facility, Globalstar said.
The company's stock has declined 47% year to date amid uncertainty over how and when it can monetize wireless spectrum assets and concerns around its ability to service its debt. Shares closed at 36 cents on Monday, giving Globalstar a $522 million market capitalization.
Minority shareholders Mudrick Capital Management LP and Warlander Asset Management LP last year accused Mr. Monroe of orchestrating a self-dealing $1.65 billion merger involving another company he owned and of improperly manipulating Globalstar directors.
Under a settlement reached in Delaware Chancery Court, three new directors joined Globalstar's board, reducing Mr. Monroe's control over corporate decisions.
Mr. Ergen has attracted more recent attention for his moves outside the satellite sector. Dish in July revealed its plans to focus on cellular service through a Justice Department-brokered deal that would allow T-Mobile US Inc. and Sprint Corp. to merge if they equip Dish with the building blocks for a new wireless competitor.
The bargain would make Dish the No. 4 cellphone carrier behind much larger rivals, though it could build new infrastructure with a relatively small amount of upfront capital.
The arrangement is contingent on T-Mobile buying Sprint, a deal that still faces an antitrust lawsuit brought by several state attorneys general. State officials are scheduled to face the wireless companies in a federal trial scheduled for December.
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(END) Dow Jones Newswires
September 09, 2019 18:50 ET (22:50 GMT)
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