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Apple Inc. will loan Globalstar $252 million to help the Covington company buy a fleet of satellites that will enable satellite communications on iPhones, federal regulatory filings show.
Globalstar, a satellite technology provider, announced in September it had been tapped to provide the network for a new emergency SOS feature on iPhones. The service allows iPhone 14 users to send messages over satellites if they are in rural or remote areas far away from cell towers.
Before that partnership was formally revealed, Globalstar said in February 2022 it struck an agreement with Canadian company Macdonald, Dettwiler and Associates Corp. to buy 17 satellites for $327 million and launch them by 2025. That deal helped Global “replenish” its existing satellite fleet, according to Securities and Exchange Commission filings.
The $252 million loan from Apple will help finance that satellite purchase, Globalstar said in SEC filings. Globalstar will cover the remaining cost through its operating cash flows.
The loan was part of an update to the original deal the two sides struck in 2020 when they began exploring the partnership. As part of that deal, Apple had already sent Globalstar two separate payments of $37.5 million in 2021 before the satellite service launched in November.
Under their partnership, Apple agreed to pay 95% of the costs Globalstar will incur in launching new satellites to build out the network. Apple has said a “majority” of the $450 million it invested to build out the necessary infrastructure for the satellite feature went to Globalstar.
Globalstar had said it would raise capital to cover the cost of building and launching the satellites. However, the latest loan “replaces the Company’s requirement to raise third-party financing for such costs,” the company’s SEC filings said.
Apple will loan the money on a quarterly basis. Globalstar will have to repay it in 16 quarterly installments starting no later than the third quarter of 2025.
As a condition of the loan, Globalstar will have to refinance other loans it took out in 2019 by March 13 and give Apple a “first-priority lien” on its assets, SEC filings said. The balance on the loans was $143 million as of Dec. 31.
The Apple partnership accounted for 24% of Globalstar’s more than $148.5 million in revenue in 2022, SEC filings show. No other customer made up more than 10%.
Globalstar’s total expenses in 2022 were $369.5 million, including a $166.5 million depreciation of “long-lived assets,” according to its annual report. Its operating expenses were $189.8 million in 2021.
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