SPACEHAB, Incorporated
, a leading provider of commercial space services, today
announced the closing of the refinancing for its Astrotech Spacecraft
Processing Facility (SPF) in Titusville, Florida. The new loan agreement with
SouthTrust Bank substantially reduces the outstanding principal balance,
lowers the fixed rate by more than 2.0%, shortens the loan by four years, and
eliminates the hedge instrument of the previous loan.

As announced in October 2003, SPACEHAB’s Astrotech Space Operations
subsidiary received a $17.5 million payment from The Boeing Company
upon termination of a contract for payload processing support services.
Boeing indicated that the decision to terminate the contract was based on the
downturn of the commercial expendable launch market and anticipates that it
will continue to rely on Astrotech facilities and services for future
launches.

SPACEHAB has applied approximately $9.9 million of the proceeds from the
contact termination towards the balance on the SPF mortgage which was secured,
in part, by the contract revenues anticipated under the Boeing contract.
SPACEHAB also applied approximately $1.3 million of the proceeds to terminate
an interest rate hedge agreement entered into simultaneously with the original
financing.

“We are very pleased with the refinancing agreement,” said Brian K.
Harrington, SPACEHAB Senior Vice President and Chief Financial Officer. “The
new loan fits within our liquidity requirements, further improves our balance
sheet, and provides for attractive terms.”

The original loan agreement with SouthTrust Bank was in the amount of
$20.0 million. After applying the proceeds noted above, and payments on the
loan to date, the loan with SouthTrust Bank was restructured to the amount of
$6.1 million, with a termination of January 28, 2007.

“The Company expects to provide continued support to Boeing for future
Delta missions at both the Florida and Vandenberg Air Force Base facilities
under future contracts,” said Michael E. Kearney, SPACEHAB President and Chief
Executive Officer. “In the meantime, Astrotech remains under contract with
Lockheed Martin Corporation for payload processing services in its Florida
facility in support of the Atlas program,” added Kearney. The contract
expires in 2006 and has four additional one-year option periods available to
extend the base period of performance on the contract through 2010.

Astrotech also provides payload processing services under contracts to
NASA, the Sea Launch Company LLC, and Orbital Sciences Corporation. The
Company, which has typically provided payload processing services to the
commercial market, has seen growth in its government business in recent years.

About SPACEHAB, Incorporated

SPACEHAB, Incorporated (www.spacehab.com ) is a leading provider of
commercial and government space services with three primary business units.
The Flight Services business unit develops, owns, and operates habitat and
laboratory modules and cargo carriers aboard NASA’s Space Shuttles for Space
Station resupply and research purposes. SPACEHAB’s Astrotech subsidiary
provides payload processing support services for both commercial and
government customers at company-owned facilities in Florida and California.
The Company’s Government Services business unit supports NASA’s Johnson Space
Center providing configuration management, product engineering, and support
services for both the Space Station and Space Shuttle programs. Additionally,
through The Space Store, Space Media provides space merchandise to the public
and space enthusiasts worldwide (www.thespacestore.com ).

The statements in this document may contain “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Such statements are subject to
risks and uncertainties that could cause actual results to differ materially
from those projected in the statements. In addition to those risks and
uncertainties discussed herein, such risks and uncertainties include, but are
not limited to, whether the Company will fully realize the economic benefits
under its U.S. National Aeronautics and Space Administration (“NASA”) and
other customer contracts, whether NASA and other customers will continue to
utilize the Company’s habitat modules and related commercial space assets,
whether plans to complete the International Space Station (“ISS”) are
fulfilled, continued availability and use of the U.S. Space Shuttle system,
technological difficulties, product demand and market acceptance risks, the
effect of economic conditions, uncertainty in government funding, the impact
of competition, delays and uncertainties in future space shuttle and ISS
programs, resolution of the Company’s indemnification claim with NASA arising
from the loss of the Columbia orbiter and its crew during the STS-107 mission,
and other risks described in reports filed by the Company with the Securities
and Exchange Commission. The Company assumes no obligation to update these
forward-looking statements.

FOR MORE INFORMATION:

Kimberly Campbell
Director of Marketing and Communications
SPACEHAB, Inc.
713.558.5049
campbell@spacehab.com