Globalstar (GSAT) saw its stock surge as much as 64% in pre-market trading on news that it expanded its agreement with Apple (AAPL, Financial). The stock later settled at a 45% gain. This new service agreement involves Globalstar providing enhanced mobile satellite services to Apple, which includes a new satellite constellation, additional ground infrastructure, and increased global licensing. The enhanced network will be managed by a unit within Globalstar SPE.
As part of this agreement, Apple will prepay Globalstar up to $1.1 billion to fund approved capital expenditures related to the expanded Mobile Satellite Services (MSS) network. These funds will be disbursed quarterly during the construction phase. Globalstar SPE will use these funds and proceeds from stock sales to cover costs for the MSS network expansion, including construction and launch costs. Additionally, Globalstar will allocate funds to repay its 13.00% senior notes due in 2029, as outlined in the "2024 Prepayment Agreement."
Furthermore, Apple has agreed to purchase 400,000 Class B shares of Globalstar SPE, representing 20% equity, for $400 million. The payment is expected around November 5, 2024, subject to closing conditions. Globalstar projects that its annual revenue in the first year after the satellite service expansion will more than double the annualized level of 2024.
