COVINGTON, La.--(BUSINESS WIRE)--Globalstar, Inc. (NYSE American: GSAT) today announced that the Company has entered into a satellite procurement agreement (the “Procurement Agreement”) with Macdonald, Dettwiler and Associates Corporation (“MDA”) pursuant to which Globalstar will acquire 17 new satellites that will replenish and extend the life of Globalstar’s existing constellation. Globalstar is acquiring the satellites to provide continuous satellite services to the potential customer under the Terms Agreement described in the Company’s Annual Reports, as well as services to Globalstar’s current and future customers. Rocket Lab USA, Inc. is the principal satellite bus subcontractor under the Procurement Agreement.
As stated above, Globalstar is acquiring the new satellites to provide satellite services to the potential customer under the Terms Agreement, as well as services to Globalstar’s current and future customers. Accordingly, as the potential customer has approved the amounts related to the construction of the new satellites, subject to certain conditions and limitations, the potential customer will reimburse Globalstar for 95% of the approved capital expenditures Globalstar makes in connection with the new satellites, interest costs of the Company’s borrowings related to the new satellites as well as termination costs, should any arise. In addition, if it elects to obtain services from Globalstar under the Terms Agreement, the potential customer is obligated to make service payments and cost reimbursements to Globalstar in amounts that would be material to the Company.
The total contract price for the initial 17 satellites is $327.0 million. Globalstar maintains the option to acquire up to nine additional satellites with flexibility in timing to place such order in addition to other optional services under the contract. If Globalstar elects to acquire new satellites, each satellite will be priced at $11.4 million, subject to certain price adjustments. The Procurement Agreement requires the Contractor to deliver the satellites by 2025, with an expectation that all satellites will be launched by the end of 2025. Globalstar plans to contract separately for launch services and launch insurance for the new satellites.
David Kagan, Globalstar’s CEO stated, “After running a competitive process with multiple bidders, we are very pleased to announce the selection of MDA in partnership with Rocket Lab for the construction of our new satellites. The combination of these vendors offered us the best overall balance of innovation, technical capability, schedule reliability and cost. These new satellites will ensure Globalstar’s ability to provide the highest quality mobile satellite services to its customer over the long-term. We look forward to beginning the process of bending metal and readying the new satellites for launch beginning in approximately three years.”
The Procurement Agreement provides for deferrals of milestone payments from February 2022 through August 2022, at a 0% interest rate. On August 16, 2022, all deferred payments will become due by which time Globalstar expects to complete a senior secured financing. This financing is expected to provide sufficient proceeds for the construction and launch of the new satellites, and the Company expects to refinance its current senior credit facility concurrent with or after the financing.
About Globalstar, Inc.
Globalstar pioneered personal safety by introducing its SPOT Satellite GPS Messenger in 2007. Today, leveraging its low-earth orbit (LEO) satellite constellation, Globalstar reliably connects and protects assets, transmits key operational data, and saves lives – from any location – for consumers, industrial companies and government agencies in over 120 countries. With a portfolio that includes SPOT GPS messengers, next-generation IoT products and modules, and cloud-based telematics solutions, Globalstar’s cost effective satellite-powered innovations give users visibility and intelligence for improving safety and operational efficiencies.
Note that all SPOT products described in this press release are the products of SPOT LLC, which is not affiliated in any manner with Spot Image of Toulouse, France or Spot Image Corporation of Chantilly, Virginia.
For more information, visit www.globalstar.com.
Safe Harbor Language for Globalstar Releases
This press release contains certain statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Forward-looking statements, such as the statements regarding our expectations with respect to the pursuit of terrestrial spectrum authorities globally, future increases in our revenue and profitability, the impact on our business due to unexpected events such as the COVID-19 coronavirus, and other statements contained in this release regarding matters that are not historical facts, involve predictions. Any forward-looking statements made in this press release are believed to be accurate as of the date made and are not guarantees of future performance. Actual results or developments may differ materially from the expectations expressed or implied in the forward-looking statements, and we undertake no obligation to update any such statements. Additional information on factors that could influence our financial results is included in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.