| News For Immediate Release |
| Contact: Jeanette Clonan Tel:+1-212-338-5658 |
Globalstar Service To Begin In Third Quarter 1999; Company Confirms Contingency Launch Plan
NEW YORK -- Sept. 22, 1998 -- Globalstar has announced that it has implemented the contingency launch plan previously factored into its business plan and expects to commence commercial service in the third quarter of 1999.
Globalstar, which successfully launched eight satellites earlier this year, expects to launch an additional 24 satellites by May 1999 and to complete the launching of its constellation of 48 satellites with four in-orbit spares by December 1999.
The contingency launch plan was activated immediately following the failed launch of 12 Globalstar satellites on board a Zenit rocket on September 9, 1998. To accomplish completion of the constellation, Globalstar will accelerate the first three of its Soyuz launches, previously scheduled for the first quarter of 1999, to November and December of 1998 and January of 1999. Globalstar will select from among an additional five Soyuz launches of four satellites each, six Delta 2 launches of four satellites each and two Zenit launches to complete the constellation by the end of 1999.
This robust plan, which includes more Delta and Soyuz launches than was contemplated earlier, adds substantial flexibility to the company's launch planning and will increase the cost of the revised launch program from a previous company estimate of $85 million to $140 million, net of insurance proceeds. In combination, the available launches would provide for a launch capability of a total of up to 80 satellites, adding substantial redundancy to our actual requirements. Globalstar needs only to launch 24 to reach a total of 32 satellites required for the initiation of commercial service.
"In establishing its business plan, Globalstar gave careful consideration to the risk inherent in launching satellites and provided for a contingency plan that could be swiftly implemented," stated Bernard L. Schwartz, chairman and chief executive officer of Globalstar. "We had not only provided for the construction of 16 spare satellites, but also arranged for launch options with both Boeing (Delta) and Starsem (Soyuz). In the aftermath of the failed Zenit launch, we now have firm commitments from these launch providers which provide us with more than adequate opportunity to complete a 32-satellite constellation to support service start-up with a delay of only a few months - a plan fully supported by our partners."
Globalstar estimates that it will require a total of approximately $565 million in additional financing before service initiation in the third quarter of 1999. This estimate includes previously disclosed requirements of $325 million plus the $140 million associated with the additional Soyuz and Delta 2 launches, and $100 million in cash interest on borrowings and operating expenses anticipated through commencement of commercial service in the third quarter of 1999. The previously disclosed items include the cost for eight ground spare satellites and expenditures on system enhancements as well as costs associated with Globalstar's financing of service provider purchases of gateways and user terminals, which Globalstar expects to recoup after service provider acceptance of this equipment. "We are today, as we always have been, fully committed to the Globalstar program," said Mr. Schwartz. "Our contingency launch plan is solid, our eight orbiting satellites are in excellent health, gateway construction is well underway, user terminals are in production and our service provider partners are fine-tuning their marketing plans. At the appropriate time, we will go to the debt market for the additional required funds or will use the other avenues available to us to complete deployment of the system." The company believes that its current cash balance of approximately $259 million and the availability of its $250 million of unused bank credit are sufficient to fund its requirements into the first quarter of 1999.
This release contains forward-looking statements, including statements regarding schedules for future satellite launches and commencement of commercial service of the Globalstar system. These forward-looking statements are based on a number of assumptions and actual results may be materially different from those expressed or implied by such statements. For a description of factors which may cause results for Globalstar to differ materially from those expressed or implied by such forward-looking statements, please consult the Securities and Exchange Act filings of Globalstar Telecommunications Limited.
