Charlie Ergen Bets on Globalstar in Debt Deal
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
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
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
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
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
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
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
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.
Write to Andrew Scurria at email@example.com and Drew
FitzGerald at firstname.lastname@example.org
(END) Dow Jones Newswires
September 09, 2019 18:50 ET (22:50 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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