Mudrick Capital Sues Globalstar Over `Self-Dealing' Merger

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(Bloomberg) -- Mudrick Capital Management sued Globalstar Inc. over its planned merger with another firm controlled by Chief Executive Officer James Monroe III, claiming the combination amounts to “self dealing."

Plans call for Globalstar, the satellite communications company where Monroe is also chairman, to be combined with FiberLight LLC and other assets in a deal valued at $1.65 billion. Mudrick’s lawsuit filed in Delaware Chancery Court on Thursday claims that the terms are unfair, and says Monroe will benefit based on his roles at the two companies and other affiliates that are contributing cash and assets to the new business.

“Globalstar will materially overpay for assets already controlled by Mr. Monroe, while at the same time significantly diluting its minority stockholders’ interests,” according to the suit.

Mudrick Capital, the investment firm run by Jason Mudrick, owns more than 5 percent of Globalstar stock, but could see its stake diluted by more than half if the deal goes through. The lawsuit doesn’t seek to block the merger, but Mudrick Capital wants the right to inspect Globalstar’s books and records, according to the court papers.

Monroe, who holds a 53 percent stake in Globalstar, praised the deal when it was announced last month and said it brought together strategic assets to meet a broad range of customer requirements and next-generation networks. FiberLight is controlled by Thermo Companies, where Monroe is the founder and controlling stockholder, according to the lawsuit.

“Long-term shareholders should benefit significantly from the combined entity’s strong balance sheet and recurring revenue from the portfolio of satellites, spectrum, fiber infrastructure and other related assets," Monroe said in an April 25 statement.

A representative for Globalstar, based in Covington, Louisiana, declined to comment.

The case is: Mudrick Capital Management L.P. v Globalstar Inc., 2018-0351, Court of Chancery, Delaware.

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