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Long-Term Debt and Other Financing Arrangements
 9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
Long-Term Debt and Other Financing Arrangements
5. LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS 
Long-term debt consists of the following (in thousands): 
 September 30, 2021December 31, 2020
 Principal
Amount		Unamortized Discount and Deferred Financing CostsCarrying
Value		Principal
Amount		Unamortized Discount and Deferred Financing CostsCarrying
Value
First Lien Facility Agreement$60,324 $1,251 $59,073 $186,988 $6,373 $180,615 
Second Lien Facility Agreement255,015 28,599 226,416 230,597 32,125 198,472 
8.00% Convertible Senior Notes Issued in 2013
1,392 — 1,392 1,376 — 1,376 
Paycheck Protection Program Loan— — — 4,973 26 4,947 
Total Debt316,731 29,850 286,881 423,934 38,524 385,410 
Less: Current Portion— — — 58,824 — 58,824 
Long-Term Debt$316,731 $29,850 $286,881 $365,110 $38,524 $326,586 

The principal amounts shown above include payment of in-kind interest, as applicable. The carrying value is net of deferred financing costs and any discounts to the loan amounts at issuance, including accretion.
 
First Lien Facility Agreement 

In 2009, the Company entered into the First Lien Facility Agreement (as amended) with a syndicate of bank lenders, including BNP Paribas, Société Générale, Natixis, Crédit Agricole Corporate and Investment Bank and Crédit Industriel et Commercial, as arrangers, and BNP Paribas, as the security agent.

The First Lien Facility Agreement is scheduled to mature in December 2022. Indebtedness under the First Lien Facility Agreement bears interest at a floating rate of LIBOR plus a margin that increases by 0.5% each year to a maximum rate of LIBOR plus 5.75%. The current interest rate is LIBOR plus 5.25%. Interest on the Facility Agreement is payable semi-annually in arrears on June 30 and December 31 of each calendar year.

In calculating compliance with the financial covenants of the First Lien Facility Agreement, the Company may include certain cash funds contributed to the Company from the issuance of the Company's common stock and/or subordinated indebtedness. These funds are referred to as “Equity Cure Contributions” and may be used to achieve compliance with financial covenants through maturity. If the Company violates any financial covenants and is unable to obtain a sufficient Equity Cure Contribution or obtain a waiver, it would be in default under the First Lien Facility Agreement and payment of the indebtedness could be accelerated. In anticipation of projected capital expenditures, in August 2021, the Company received a waiver from its senior lenders, increasing permitted capital expenditure limits under the First Lien Facility Agreement. As of September 30, 2021, the Company was in compliance with the covenants of the First Lien Facility Agreement.

The First Lien Facility Agreement requires mandatory prepayments of principal with any Excess Cash Flow (as defined and calculated in the First Lien Facility Agreement) on a semi-annual basis. During 2021, the Company was required to pay $4.4 million to its first lien lenders resulting from the Excess Cash Flow calculation as of December 31, 2020. This payment reduced future principal payment obligations (see table below).

The amended and restated First Lien Facility Agreement includes a requirement that the Company raise no less than $45.0 million from the sale of equity prior to March 30, 2021. The Company fulfilled this requirement in March 2021 with proceeds from the exercise of all the warrants issued to the Second Lien Facility Agreement lenders in November 2019. The Company received proceeds totaling $47.3 million, of which $3.6 million was received in December 2019 and the remaining $43.7 million was received during the first quarter of 2021. In April 2021, these proceeds were used to pay the remaining principal payments due in each of June 2021 and December 2021 (see table below).

In June and September 2021, the Company received two advance payments of $37.5 million each from a customer (see further discussion in Note 2: Revenue). The Company used these proceeds to pay a portion of the remaining amount due under the First Lien Facility Agreement. These voluntary prepayments were applied to the payments due in each of December 2021, June 2022 and December 2022, respectively (see table below). Additionally, the Company wrote off $2.3 million and
$0.8 million in deferred financing costs, which represents the portion of debt prepaid by the Company in the second and third quarters of 2021, respectively.

The First Lien Facility Agreement also requires the Company to maintain a debt service reserve account, which is pledged to secure all of the Company's obligations under the First Lien Facility Agreement. As of September 30, 2021, the balance in the debt service reserve account was $51.1 million and is classified as non-current restricted cash on the Company's condensed consolidated balance sheet consistent with the remaining principal outstanding of $60.3 million due in December 2022. The Company currently intends to fully pay off the remaining principal balance during the fourth quarter of 2021. In connection with the anticipated early pay off, the Company expects to receive a partial refund of premiums previously paid.

The following table sets forth the scheduled principal payments for the First Lien Facility Agreement, reflecting the application of prepayments made during 2021 (amounts in thousands):

Principal Payment ActivityTotal
Scheduled Payment DateJune 30, 2021December 31, 2021June 30, 2022December 31, 2022
Scheduled Principal Payments$37,468 $20,000 $20,000 $109,520 $186,988 
Less: Excess Cash Flow Payment, March 2021(4,357)— — — (4,357)
Less: Mandatory Prepayment, April 2021(33,111)(14,191)— — (47,302)
Less: Voluntary Prepayment, June 2021— (5,809)(20,000)(11,696)(37,505)
Less: Voluntary Prepayment, September 2021— — — (37,500)(37,500)
Remaining Scheduled Payments$— $— $— $60,324 $60,324 

Second Lien Facility Agreement

In November 2019, the Company entered into a $199.0 million Second Lien Facility Agreement with Thermo, an affiliate of EchoStar Corporation and certain other unaffiliated lenders. The Second Lien Facility Agreement is scheduled to mature in November 2025. The loans under the Second Lien Facility Agreement bear interest at a blended rate of 13.5% per annum to be paid in kind (or in cash at the option of the Company, subject to restrictions in the First Lien Facility Agreement).

As additional consideration for the loan, the Company issued the lenders warrants to purchase 124.5 million shares of voting common stock at an exercise price of $0.38 per share. All of these warrants were exercised before their expiration date on March 31, 2021, resulting in proceeds to the Company totaling $47.3 million.

As of September 30, 2021, the Company was in compliance with the covenants of the Second Lien Facility Agreement.

Refer to Note 6: Derivatives and Note 7: Fair Value Measurements for further discussion on the compound embedded derivative bifurcated from the Second Lien Facility Agreement.

Thermo Loan Agreement 

In connection with the amendment and restatement of the First Lien Facility Agreement in July 2013, the Company amended and restated its loan agreement with Thermo (the “Loan Agreement”). The Loan Agreement was convertible into shares of common stock at a conversion price of $0.69 (as adjusted) per share of common stock. The Loan Agreement accrued interest at 12% per annum, which was capitalized and added to the outstanding principal in lieu of cash payments.

On February 19, 2020, Thermo converted the entire principal balance outstanding under the Loan Agreement, which totaled $137.4 million and included accrued interest since inception of $93.9 million. This conversion resulted in the issuance of 200.1 million shares of common stock. In accordance with applicable accounting guidance for debt extinguishment with related parties, upon conversion, the remaining debt discount was written off and recorded as a contribution to capital though equity and the associated derivative liability was marked to market at the conversion date and then extinguished through equity as a contribution to capital.
Refer to Note 6: Derivatives and Note 7: Fair Value Measurements for further discussion on the compound embedded derivative bifurcated from the Loan Agreement with Thermo.

8.00% Convertible Senior Notes Issued in 2013
 
In May 2013, the Company issued $54.6 million aggregate principal amount of its 2013 8.00% Notes. The 2013 8.00% Notes are convertible into shares of common stock at a conversion price of $0.69 per share of common stock, as adjusted pursuant to the terms of the Fourth Supplemental Indenture between the Company and U.S. Bank National Association, as Trustee (the “Indenture”). The 2013 8.00% Notes are senior unsecured debt obligations that mature on April 1, 2028, subject to various call and put features, and bear interest at a rate of 8.00% per annum. Interest is paid in cash at a rate of 5.75% and in additional notes at a rate of 2.25%. Since issuance, $55.5 million of principal amount of the 2013 8.00% Notes have been converted resulting in the issuance of 98.6 million shares of Globalstar common stock.

The Company may redeem the 2013 8.00% Notes, with the prior approval of the majority lenders under the First Lien Facility Agreement and the Second Lien Facility Agreement. A holder may convert its 2013 8.00% Notes at its option at any time prior to April 1, 2028 into shares of common stock.

The Indenture provides for customary events of default. As of September 30, 2021, the Company was in compliance with respect to the terms of the 2013 8.00% Notes and the Indenture.

The amount by which the if-converted value of the 2013 8.00% Notes exceeded the principal amount at September 30, 2021, assuming conversion at the closing price of the Company's common stock on that date of $1.67 per share, is approximately $2.5 million.

Refer to Note 6: Derivatives and Note 7: Fair Value Measurements for further discussion on the compound embedded derivative bifurcated from the 2013 8.00% Notes.

Paycheck Protection Program Loan

In April 2020, the Company sought relief under the Coronavirus Aid, Relief and Economic Security (“CARES”) Act and received a $5.0 million loan (the "PPP Loan") under the PPP. In June 2021, the Small Business Administration ("SBA") approved the Company's request for forgiveness of all amounts outstanding under the PPP Loan, including accrued interest. Prior to forgiveness, the PPP Loan was an unsecured debt obligation and was scheduled to mature in April 2022. Any amount not forgiven by the SBA was subject to an interest rate of 1.00% per annum commencing on the date of the PPP Loan.

The Company evaluated the applicable accounting guidance relative to the PPP Loan and accounted for the proceeds of the PPP Loan as debt under ASC 470. As the entire principal balance, including accrued interest, was forgiven in June 2021, the Company recorded a gain on extinguishment of debt totaling $5.0 million on its condensed consolidated statements of operations for the period ended June 30, 2021.