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LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS
 12 Months Ended
Dec. 31, 2022
Debt Disclosure [Abstract]  
LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS 6. LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS
 
Long-term debt consists of the following (in thousands): 
 December 31, 2022December 31, 2021
Principal
Amount		Unamortized Discount and Deferred Financing CostsCarrying
Value		Principal
Amount		Unamortized Discount and Deferred Financing CostsCarrying
Value
2019 Facility Agreement$143,213 $11,098 $132,115 $263,812 $27,287 $236,525 
Vendor financing59,822 59,822 — — — 
8.00% Convertible Senior Notes Issued in 2013
— — 1,407 — 1,407 
Total debt and vendor financing203,035 11,098 191,937 265,219 27,287 237,932 
Less: current portion59,822 — 59,822 — — — 
Long-term debt and vendor financing$143,213 $11,098 $132,115 $265,219 $27,287 $237,932 
 
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. All amounts outstanding associated with the Company's vendor financing arrangement are due within the next twelve months and, therefore, are reflected as a current liability on the Company's consolidated balance sheets.

2019 Facility Agreement

In November 2019, the Company entered into a $199.0 million facility agreement with Thermo, an affiliate of EchoStar Corporation and certain other unaffiliated lenders (the "2019 Facility Agreement"). The 2019 Facility Agreement is scheduled to mature in November 2025. The remaining loans under the 2019 Facility Agreement bear interest at a rate of 14.0% per annum to be paid in kind (or in cash, at the option of the Company).
The Service Agreements require the Company to refinance all loans outstanding under the 2019 Facility Agreement. A portion was refinanced in November 2022 and the remaining portion is to be refinanced by March 13, 2023 (as amended). On February 13, 2023, the Company provided notice, as required under the 2019 Facility Agreement, to the remaining lender of its intent to voluntarily prepay all remaining amounts due under the 2019 Facility Agreement.

In connection with our Partner's launch of Services on November 15, 2022, the Company was obligated to complete the Thermo Debt Conversion (as described in our Current Report on Form 8-K filed September 7, 2022). To satisfy this obligation, the Company entered into an Exchange Agreement dated as of November 15, 2022 (the “Exchange Agreement”) with affiliates of Thermo and certain other lenders (collectively, the “Exchanging Lenders”) providing for the exchange of $149.4 million outstanding principal amount of, and accrued and unpaid interest on, the Exchanging Lenders’ loans under the 2019 Facility Agreement for 149,425 shares of 7.0% Perpetual Preferred Stock, Series A, liquidation preference $1,000 per share (the “Series A Preferred Stock”).

The Company recorded the debt extinguishment in the fourth quarter of 2022 representing the difference between the net carrying amount prior to extinguishment (including unamortized deferred financing costs, debt discounts and derivatives) and the reacquisition price of the debt. In accordance with accounting guidance for debt extinguishment with related parties, the Company recorded the portion exchanged by Thermo of $30.8 million as a contribution to capital through equity on its consolidated balance sheets. For the portion exchanged by other lenders, the Company recorded a gain on extinguishment of debt totaling $2.8 million on its consolidated statements of operations.

The Company's obligations under the 2019 Facility Agreement are guaranteed on a senior secured basis by all of its domestic subsidiaries' assets and are secured by a first priority lien on substantially all of the assets of the Company and its domestic subsidiaries (other than their FCC licenses), including patents and trademarks, 100% of the equity of the Company's domestic subsidiaries and 65% of the equity of certain foreign subsidiaries. 

The cash proceeds from this loan were net of a 3%, or $6.0 million, original issue discount (the "OID"). A portion of this OID was recorded as a debt discount of $4.0 million. This debt discount was netted against the principal amount of the loan and is being accreted using an effective interest method to interest expense over the term of the loan.

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. The Company determined that the warrants were equity instruments and recorded them as a part of stockholders’ equity. A portion of the fair value of the warrants was recorded as a debt discount of $15.8 million. This debt discount was netted against the principal amount of the loan and is being accreted using an effective interest method to interest expense over the term of the loan. All of the warrants issued to the lenders were exercised before their expiration date on March 31, 2021.

The 2019 Facility Agreement contains customary events of default and requires that the Company satisfy various financial and non-financial covenants, including the following items that were in place as of December 31, 2022:

•The Company's capital expenditures do not exceed $25.0 million for 2021 or 2022, excluding capital expenditures for the replacement satellites and network upgrades associated with the Service Agreements;
•The Company's expenditures in connection with its spectrum rights do not exceed $20.0 million;
•The Company maintains at all times a minimum liquidity balance of $3.6 million;
•The Company achieves minimum adjusted consolidated EBITDA (as defined in the 2019 Facility Agreement) of $21.1 million and $27.1 million for the six-month periods ended June 30, 2022 and December 31, 2022, respectively;
•The Company maintains a minimum debt service coverage ratio of 0.90:1;
•The Company maintains a maximum net debt to adjusted consolidated EBITDA ratio of 2.75:1; and
•The Company maintains a minimum interest coverage ratio of 4.73:1 for the two semi-annual measurement periods leading up to December 31, 2022.

The Company received waivers from its senior lenders to permit certain transactions during 2022. including capital expenditures associated with our obligations under the Service Agreements, vendor financing associated with the MDA agreement, termination of the Globalstar pension plan, and redemption of the 2013 8.00% Notes.

As of December 31, 2022, the Company was in compliance with the covenants of the 2019 Facility Agreement.
The 2019 Facility Agreement requires mandatory prepayments of principal with any Excess Cash Flow (as defined and calculated in the 2019 Facility Agreement) on a semi-annual basis. The Company generated excess cash flow for the six-month measurement period ended June 30, 2022 and was required to pay $6.3 million to its lenders in August 2022. This payment reduced future principal payment obligations. The Company generated excess cash flow for the six-month measurement period ended December 31, 2022 and will be required to pay approximately $2.0 million if the debt remains outstanding on March 16, 2023.

The Company evaluated the various embedded derivatives within the 2019 Facility Agreement related to certain contingently exercisable put options. Due to the substantial discount upon issuance, as calculated under applicable accounting guidance, these prepayment features were required to be bifurcated and separately valued. The Company initially recorded the compound embedded derivative liability as a non-current liability on its consolidated balance sheets with a corresponding debt discount, which is netted against the face value of the 2019 Facility Agreement. The Company is accreting the debt discount associated with the compound embedded derivative liability to interest expense through the maturity date using an effective interest rate method. Refer to Note 7: Derivatives and Note 8: Fair Value Measurements for further discussion on the compound embedded derivative bifurcated from the 2019 Facility Agreement.

Thermo's participation in the 2019 Facility Agreement was reviewed and approved by the Company's Strategic Review Committee, which is a committee of disinterested and independent directors who are represented by independent legal counsel. See Note 11: Related Party Transactions for further information on the role and responsibility of the Strategic Review Committee.

Vendor Financing

In February 2022, the Company entered into a satellite procurement agreement with MDA (see Note 9: Commitments and Contingencies for further discussion). This agreement (as amended in October 2022 and January 2023) provides for deferrals of milestone payments through March 15, 2023. The Company received a waiver from its senior lenders to permit this vendor financing as subordinated indebtedness, The Company has made $34 million in payments to MDA under this agreement, including $14 million during the fourth quarter 2022 and $20 million in January 2023. Interest accrues on the amount outstanding at an annual rate of 7%, which increased to 10.5% on balances between December 2022 and March 2023. As of December 31, 2022, the Company had recorded $59.8 million in short-term vendor financing and total accrued interest of $1.3 million on its consolidated balance sheet associated with this agreement. The Company has also accrued $36.1 million on its consolidated balance sheet associated with work performed but not yet billed. As discussed in the Recent Developments section of Note 1: Summary of Significant Accounting Policies, in February 2023, Globalstar and its Partner under the Service Agreements agreed to amend the Service Agreements to provide for, among other things, Partner’s prepayment of $252 million to pay amounts currently due and payable, as well as other amounts as they become due and payable, under the satellite procurement agreement.

Series A Preferred Stock

As discussed above, on November 15, 2022, the Company issued 149,425 shares of Series A Preferred Stock in exchange for $149.4 million outstanding principal amount of its 2019 Facility Agreement, and recorded the fair value of the shares totaling $105.3 million on the Company's consolidated balance sheet. The shares of Series A Preferred Stock do not possess voting rights, other than certain matters specifically affecting the rights and obligations of the Series A Preferred.

Holders of Series A Preferred Stock will be entitled to receive, when, as and if declared by our Board of Directors or a committee thereof, cumulative cash dividends based on the liquidation preference of the Series A Preferred Stock, at a fixed rate equal to 7.00% per annum, payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each year, beginning on January 1, 2023. In January 2023, the Company's Board of Directors approved the payment of dividends totaling $1.3 million for the period November 15, 2022 through December 31, 2022, and these dividends have been paid.

Series A Preferred Stock may be redeemed by the Company, in whole or in part, at any time. The holders of the Series A Preferred Stock do not have any rights to convert or require the Company to redeem such stock. The holders of the Series A Preferred stock have customary liquidation preferences.

Refer to Note 8: Fair Value Measurements for further discussion on the valuation of the preferred stock.

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. During 2022, the holders converted the remaining principal amount outstanding of $1.4 million into 2.3 million shares of Globalstar common stock at a conversion price of $0.69 per share.

As a result of the conversions during 2022, the Company recorded gains and losses on extinguishment of debt resulting from the difference between the fair value of shares of Globalstar common stock issued to the holders and the principal amount of the notes that converted as well as the write-offs of the embedded derivative associated with the 2013 8.00% Notes. The net impact to the Company's consolidated statements of operations in 2022 was a gain of less than $0.1 million.

Refer to Note 7: Derivatives and Note 8: Fair Value Measurements for further discussion on the compound embedded derivative bifurcated from the 2013 8.00% Notes.

2009 Facility Agreement
 
In 2009, the Company entered into a facility agreement with a syndicate of bank lenders (the "2009 Facility Agreement"). In 2021, the Company fully repaid the 2009 Facility Agreement prior to its scheduled maturity in December 2022. In connection with the debt prepayments and final payoff made during 2021, the Company recorded net losses on extinguishment of debt totaling $1.9 million on its consolidated statements of operations representing the difference between the net carrying amount prior to extinguishment (including unamortized deferred financing costs) and the reacquisition price of the debt (primarily including of the partial refund of premiums).

Paycheck Protection Program Loan
In April 2020, the Company sought relief under the CARES Act and received a $5.0 million loan under the Paycheck Protection Program ("PPP"), (the "PPP Loan"). In June 2021, the Small Business Administration approved the Company's request for forgiveness of all amounts outstanding under the PPP Loan, including accrued interest. 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 consolidated statements of operations.

Debt maturities
 
Annual debt maturities for each of the five years following December 31, 2022 and thereafter are as follows (in thousands):
2023$— 
2024— 
2025143,213 
2026— 
2027— 
Thereafter— 
Total$143,213 
 
Amounts in the above table are calculated based on amounts outstanding at December 31, 2022, and therefore exclude paid-in-kind interest payments that will be made in future periods. Additionally, amounts in the table above exclude the Company's vendor financing arrangement, of which $59.8 million was outstanding as of December 31, 2022 and future recoupment amounts due under the Service Agreements.