Globalstar ( GSAT ) stock surged Friday after it disclosed expanding its strategic partnership with Apple Inc ( AAPL ) in a newly updated $1.1 billion services agreement.

Under this extended deal, Globalstar ( GSAT ) will provide Apple ( AAPL ) with enhanced satellite services, covering the development, launch and operation of a new mobile satellite services (MSS) network. This agreement builds on the existing service terms.

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The revised agreements enable Globalstar ( GSAT ) to deliver these services through a new MSS network featuring a fresh satellite constellation, expanded ground facilities and broader MSS licensing worldwide. The new MSS network will be owned by a subsidiary known as Globalstar Licensee, which Globalstar ( GSAT ) will continue to manage and operate.

Apple ( AAPL ) will provide substantial prepayments, including up to $1.1 billion, to fund the Extended MSS Network's construction and operational phases. These funds will also cover related costs like infrastructure and debt repayment.

Additionally, Apple ( AAPL ) has agreed to acquire 400,000 Class B Units in Globalstar Licensee, giving it a 20% equity stake for $400 million.

In exchange for these expanded satellite services, Apple ( AAPL ) will pay Globalstar ( GSAT ) incremental service fees tied to the cost of the MSS network, additional services and associated expenses, including performance-based bonuses.

A portion of these payments will be contingent on achieving certain milestones, including service levels and regulatory approvals. Moreover, the deal specifies annual service fees of $30 million, which are set to accelerate under the new agreement terms.

Globalstar ( GSAT ) and Apple ( AAPL ) have agreed on a structure allowing for quarterly redemption of Apple's ( AAPL ) Class B Units, starting once Apple ( AAPL ) recovers the total amount of the prepayment. Globalstar ( GSAT ) retains the right to repurchase these units under certain conditions, while Apple ( AAPL ) can initiate redemption in case of specific contract breaches by Globalstar ( GSAT ).

The parties also adjusted Globalstar's ( GSAT ) 2023 Funding Agreement by removing cash sweeps, relaxing certain covenant conditions, deferring repayment start dates to 2026, and strengthening Globalstar's ( GSAT ) obligations under the 2024 Prepay Agreement with additional lien security.

Globalstar ( GSAT ) reported fiscal second-quarter 2024 sales growth of 10% to $60.4 million, beating the consensus estimate of $57.2 million. Adjusted EBITDA was $32.6 million. Globalstar ( GSAT ) expects revenue of $235 million–$250 million versus the consensus of $237.5 million.

GSAT Price Action: Globalstar ( GSAT ) stock is up 32.90% at $1.39 at publication Friday.

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This article was generated using artificial intelligence and was reviewed by Benzinga editors