Globalstar Shareholder Letter

August 12, 1997

Dear Shareholder,

I am pleased to report that Globalstar is making substantial progress on all fronts. As our activities accelerate in anticipation of our first scheduled launch in early December 1997, we are meeting all of the milestones we set for ourselves in order to initiate global telecommunications service in late 1998.

From space and ground system deployment and in- country license procurements, to financing and market development efforts around the world, we continue to hit our targets. Our enthusiasm and confidence in the Globalstar system have never been higher.

The following highlights some key developments over the past few months:

• Globalstar in Russia - Globalstar, Loral and the largest Russian telecommunications operator, Rostelcom JSC, signed an agreement that will bring access to Globalstar's advanced telephony services for hundreds of thousands of Russians beginning in late 1998. The agreement, which establishes GlobalTel, a joint stock company, to act as exclusive provider of Globalstar services in Russia, solidifies Globalstar's leadership in that country and advances our strategy to provide satellite-based services throughout the world.
• Globalstar in Colombia - Globalstar service providers France Telecom and Alcatel, in a joint venture known as TE.SA.M. (Telecommunications par Satellites Mobiles), teamed with Telecom Colombia to form a joint-owned company, TE.SA.M. Colombia S.A. This new company will be the exclusive service provider of Globalstar mobile telecommunications products and services in Colombia, South America. Globalstar has established franchises with local service providers in 105 countries to date.
• Licensing - Service provider activity has been high with 19 countries to date having granted required local licensing. Most recently, Globalstar Canada was issued approval by Industry Canada, a government agency, to provide Globalstar services throughout Canada. We see no impediment to completing the task of securing the necessary additional licenses in time for initiation of service in late 1998.
• Gateways - Globalstar partners placed an order totaling $275 million with QUALCOMM for 35 gateways to be installed ready to provide Globalstar service worldwide by the end of 1998. QUALCOMM continues to perform in an outstandingmanner in support of our program and the development and installation of the ground system.

  Further evidence of our commitment to the timely initiation of Globalstar service is the status of pre-production gateway construction. Of the four pre-production gateways — in France, South Korea, Australia and Texas — three sites are ready for launch support; one is nearing completion and is undergoing testing. The completed gateways have been linked to the Globalstar operations control center (GOCC) in San Jose via the Globalstar data network. These four gateways will support the launch had subsequent testing of our first four satellites.

• Satellites - Sufficient hardware is now on hand to warrant around-the-clock integration and test operations at Alenia Spazio's assembly facility in Rome. To date, four flight models have completed integration and assembly in Rome and are in final testing, well in advance of our first scheduled launch date.
• Financing - In June, Globalstar reached 90 percent of its project financing — $2.3 billion raised of the $2.5 billion required — by selling $325 million of 11-1/4% senior notes due 2004 in a private offering, furthering our steady progress in financing the construction and deployment of the Globalstar system. We are encouraged by the positive reception our financing efforts have received; it validates our own belief that Globalstar is regarded as the preeminent system designed to provide wireless telephony by satellite.

Looking ahead, Globalstar is on track for production of user terminals and rolling out the first gateways. After our initial launch of satellites, we will commence system tests, and then continue launches throughout 1998.

To that end, launch support to the program is on track. The Delta II launch failure earlier this year involving an Air Force satellite was analyzed by the U.S. Air Force and McDonnell Douglas, and corrective actions have been verified by three consecutive successful launches. The team for the Zenit launcher, which will loft three payloads of 12 satellites each, has completed development of all the modifications needed to begin these launches in May 1998. Our launch schedule provides a certain amount of redundancy to compensate for potential launch failures, bolstering our confidence that the Globalstar program will stay on schedule.

I hope you share our excitement about Globalstar. When we embarked on this project seven years ago, we recognized that while the risks were high, so were the rewards. As we enter Globalstar's operational phase, having met all challenges to date, I'm increasingly confident that this business opportunity will deliver great value not only to our subscribers but to our shareholders as well.

Sincerely,

Bernard L. Schwartz
Chairman and Chief Executive Officer

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