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| News For Immediate Release |
| Contact: Jeanette Clonan Tel: (212) 338-5658 |
Globalstar Calls For Redemption of its Outstanding 6 1/2% Convertible Preferred Equivalent Obligations
NEW YORK, April 2, 1998 -- Globalstar Telecommunications Limited ("GTL") announced today that it is calling for redemption on April 30, 1998 of all its outstanding 6 1/2% convertible preferred equivalent obligations due 2006 (the "CPEOs"). The company expects that all or substantially all of the CPEOs will be converted by holders before the redemption date into common stock of GTL at a conversion price of $30.81 per share. (The original conversion price of $65.00 has been adjusted for a two-for-one stock split in May 1997 and an antidilution adjustment made in connection with GTL 92s rights offering in April 1997.)
If all of the CPEOs are converted, the company will issue 10,061,668 shares of common stock as a result of such conversion. CPEOs that are not converted will be redeemed at 103% of their principal amount, payable in GTL common stock. Interest on the CPEOs from the last interest payment date to the redemption date will also be paid in shares of GTL common stock. In addition, the company expects that, based on its current stock price, it will issue approximately 292,000 shares of common stock in the aggregate (.0471 shares per CPEO) as an interest make-whole payment in connection with such redemption. The interest make-whole payment is approximately $2.68 per CPEO, an amount equal to the present value of the interest payments that would have otherwise been payable on the CPEOs for the period from April 30, 1998 to March 6, 1999.
The number of shares issuable in respect of any CPEOs redeemed and in respect of interest and interest make-whole payments is based on 100% and 90%, respectively, of the average of the Current Market Value of GTL common stock for the period from April 15 to April 30, 1998. Current Market Value in turn is the average of the high and low sales price of GTL stock on each trading day during that period. GTL shares issuable in connection with any conversion or redemption of the CPEOs and interest and interest make-whole payments have been registered with the SEC pursuant to GTL 92s prospectus dated September 18, 1996.
Holders of CPEOs will receive a notice from the trustee with instructions for the redemption.
Bernard L. Schwartz, chairman and chief executive officer of GTL, stated that given the appreciation in the value of the stock since the issuance of the CPEOs in 1996, the redemption makes sense for the company at this time as it will strengthen its balance sheet as well as afford it additional financing flexibility going forward.
Globalstar, led by Loral Space & Communications, is a partnership of the world's leading telecommunications service providers and equipment manufacturers, including QUALCOMM Incorporated, AirTouch Communications, Alcatel, Alenia, DACOM, Daimler-Benz Aerospace, Elsag Bailey, France Telecom, Hyundai, Space Systems/Loral and Vodafone. Globalstar is building and preparing to launch and operate a LEO satellite-based digital telecommunications system designed to enable local service providers to offer low-cost, high-quality wireless voice telephony and data services in virtually every populated area of the world. The common stock of Globalstar Telecommunications Limited, a Bermuda company, is listed on the NASDAQ National Market under the symbol "GSTRF."
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