Shares of mobile satellite voice and data services provider Globalstar (NYSEMKT: GSAT) are surging today. Up as much as 23% at one point, the stock is still enjoying a healthy 12.9% gain as of 12:05 PM EST.
The reason: It just settled a big lawsuit.
This morning, Globalstar announced it has settled litigation with private equity firms Mudrick Capital Management and Warlander Asset Management, who had objected to how Globalstar was being run. The terms of the settlement require Globalstar to:
- Install two new minority directors and an additional independent board member on its board of directors.
- Establish a strategic review committee to consider "financing options" for the company, including rolling over as much as 85% of the company's more than $495 million in debt.
- Require that a majority of independent stockholders vote to approve any related party transactions management might want to enter into going forward.
Three existing directors will give up their seats on the board to make way for the new directors.
Globalstar will also sell up to $60 million worth of new common stock, and Mudrick Capital Management and Warlander Asset Management, along with Globalstar parent company Thermo Capital, all commit to "purchase a pro rata share" of said equity offering.
In a joint statement on the settlement, Mudrick Capital Management and Warlander Asset Management expressed a desire to "monetize" Globalstar's assets. This sentiment, combined with the formation of a strategic review committee, strongly suggests that a sale of Globalstar could be one endgame of all this maneuvering. Investors appear to be bidding up the shares not only in relief over the settlement -- but also in anticipation of a payday yet to come.
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