Net Loss Narrows, Minutes of Use Increase; Operating Expenses Substantially Lower; Globalstar, Creditors Working to Finalize Financial Restructuring Plan

Globalstar , the global mobile satellite telephone
service, today released its results for the quarter ended September
30, 2001.

The company also announced that it is finalizing a new business
plan aimed at ensuring uninterrupted service for Globalstar customers.
Globalstar has been discussing this plan with its principal creditors,
with the objective of achieving a negotiated financial restructuring
in the near future.

Financial Results

A full discussion of Globalstar’s financial performance for the
third quarter can be found in the company’s Quarterly Report on Form
10-Q, to be filed shortly with the U.S. Securities and Exchange
Commission. Highlights are as follows:

  • Globalstar recorded a total of 7.4 million minutes of use
    (MOUs), including both mobile and fixed service, in the third
    quarter, representing a 37% increase in traffic over the
    previous quarter.

  • The estimated number of mobile and fixed subscribers at the
    end of September was 58,600, an increase of 14% from the
    previous quarter.

  • The company’s operating expenses (excluding depreciation and
    amortization) were $19.7 million for the third quarter, a
    decline of 57% compared to $45.9 million for the same quarter
    in 2000. As a result, Globalstar ended the third quarter with
    $68 million cash on hand, well ahead of earlier projections,
    and expects to finish the year with approximately $45 million
    cash.

“Globalstar has made substantial progress in building a more
viable business for the future through a combination of more
aggressive and targeted marketing and a dramatic reduction of
operating expenses,” said Olof Lundberg, acting chief executive
officer of Globalstar. “The next step now is to finalize our business
plan with our creditors, which we expect to do in the very near
future. Together, these steps should reassure customers of our
determination to provide them with uninterrupted, leading-edge global
satellite telephone service.”

Globalstar, L.P. reported a net loss applicable to ordinary
partnership interests for the quarter of $129 million, down 10% from
the previous quarter’s loss of $144 million. The current quarter’s
loss is equivalent to $1.98 per partnership interest, which converts
to a loss of $0.33 per share of Globalstar Telecommunications Limited.

Although minutes of use continued to climb in the third quarter,
service revenue, net of discounts and promotions, declined 18% from
the previous quarter to $1.4 million. This decrease was due in large
part to the introduction of a revised, aggressive wholesale pricing
scheme. Net revenue, including royalty income from phone sales, and
less discounts and promotions, was $1.5 million, down 20% from the
previous quarter.

To further reduce operating costs, Globalstar has reduced its
headcount significantly over the course of this year. By mid-November,
the company expects to bring its headcount level down to 125
employees, which will still allow Globalstar to maintain basic
operations in conjunction with the consolidation of service provider
operations called for in its new business plan.

Restructuring Plan

Globalstar and its partners have been developing a new business
plan that is intended to form the basis for restructuring the
company’s finances and to ensure uninterrupted service for Globalstar
customers. This plan assumes the conversion of Globalstar debt
obligations into equity in a new Globalstar company, along with the
consolidation of certain Globalstar service provider operations into
this new company. The aim of the service provider consolidation is to
bring further efficiencies to the operation of the Globalstar network
and to allow for increased coordination in the company’s service
offerings and pricing. Globalstar also intends to continue to offer
its services through independent gateway operators in regions not
included in the consolidation.

Because the company has been able to reduce its operating expenses
more rapidly than originally planned, Globalstar expects to begin 2002
with approximately $45 million cash on hand. If Globalstar’s
restructuring plan is agreed upon and put into effect, and if the new
company receives the revenues currently projected under the plan,
Globalstar believes it can achieve cash flow breakeven operations with
far less additional funding than would have been required under the
company’s earlier business model. The company is currently in
discussions with a number of possible investors to meet this
requirement.

Globalstar has been discussing its new business plan with its
principal creditors, with the objective of achieving a negotiated
financial restructuring plan. Assuming Globalstar is able to
successfully conclude these discussions, the company and certain of
its affiliates will commence voluntary Chapter 11 cases and seek to
confirm a Chapter 11 plan which both implements the terms agreed with
its creditors and binds all of Globalstar’s creditors. Globalstar will
likely decide to seek voluntary protection under the federal
bankruptcy laws even without a pre-negotiated settlement with its
principal creditors. Moreover, its creditors may, at anytime, initiate
involuntary bankruptcy proceedings against Globalstar.

In any financial restructuring, all partnership interests will
likely be severely diluted, in which event they will have little or no
value, or be eliminated entirely. This would apply to equity held by
all of Globalstar’s partners, including Globalstar Telecommunications
Limited, the NASDAQ-listed entity.

As announced in January, in order to have sufficient funds
available to pursue continued progress in its marketing and service
activities, Globalstar has suspended indefinitely principal and
interest payments on all of its funded debt, including its credit
facility, vendor financing agreements and Senior Notes, as well as
dividend payments on its preferred stock. Suspension of these payments
remains in effect, and, as a result of these actions, defaults have
now occurred with respect to some of Globalstar’s debt.

Sales and Marketing Operations

In the third quarter, businesses, individuals, and government
organizations around the world continued to turn to Globalstar to
provide not only basic business communications but also emergency
telecoms services. Use of Globalstar service rose strongly during the
quarter in several high-potential markets, including China (up 78%),
Canada (up 120%), Russia (up 203%), and Korea (up 157%). Major
milestones of the quarter include:

  • In the wake of the tragic events of September 11 in the U.S.,
    Globalstar offered its support to a variety of companies and
    both government and private organizations involved in the
    recovery effort. In addition, the company saw a significant
    rise in sales and usage of service. Globalstar continues to
    receive inquiries from companies and organizations as they now
    re-evaluate their future telecommunications needs,
    particularly in the area of emergency communications. Many
    major media organizations also made extensive use of
    Globalstar’s service in providing coverage of events.

  • In late October, Qualcomm held a public demonstration of its
    MDSS Globalstar communications system, which can provide
    high-capacity data, voice and video communications to and from
    commercial aircraft for security and avionics applications.

  • The Brazilian civil aviation authority certified Globalstar do
    Brasil and Avionics, a Sao Paulo-based aviation services
    company, to sell and install Globalstar equipment on executive
    jets in Brazil for both voice and data services. The two
    companies are now working towards further approvals for
    similar use aboard commercial aircraft.

  • The Italian Navy is in the process of installing Globalstar
    fixed phone units on all major vessels in its entire fleet.
    The phones will be used to provide secure, reliable
    communications from virtually anywhere the ships may be
    operating. Phones are also now being installed across the
    entire fleet of Sea River, a major U.S. maritime tanker fleet
    operator. Globalstar fixed units on these vessels will be used
    by Sea River crews for general communications.

  • Globalstar phones were used extensively between September and
    November by American military troops temporarily stationed in
    Egypt for personal calls back to their homes in the U.S.

System Update

The satellite constellation continues to perform exceptionally
well with continued very high rates of call retention and call
completion. Although three of the company’s 48 operational satellites
experienced anomalies earlier this year and were taken out of service,
one of the affected satellites has been restored to service, the
second was replaced in early October by an on-orbit spare, and the
third will be replaced in early December. With only one satellite out
of operation, service outages are now very brief and infrequent,
affecting only a small number of customers and only in certain
non-temperate regions. When the third satellite is replaced in the
next few weeks, outages will disappear completely.

Globalstar L.P. is a partnership of the world’s leading
telecommunications service providers and equipment manufacturers,
including co-founders Loral Space & Communications and Qualcomm
Incorporated; Alenia; China Telecom (HK); DACOM; DaimlerChrysler
Aerospace; Elsacom (a Finmeccanica Company); Hyundai; TE.SA.M (a
France Telecom/Alcatel company); Space Systems/Loral; and Vodafone
Group Plc. Globalstar Telecommunications Limited (GTL), which is also
a partner in Globalstar L.P., is a NASDAQ-listed company, which allows
public equity investment in Globalstar L.P. For more information,
visit Globalstar’s web site at www.globalstar.com.

This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These statements
provide our expectations or forecasts of future events. Actual results
could differ materially as a result of known or unknown risks and
uncertainties and other factors, including our ability to secure
sufficient funding with acceptable terms under credit facilities or
from other sources, the ability to attract new investors to fund
continued operations, the ability to restructure our debt, the risk of
acceleration of existing debt facilities and the exercise of remedies
with respect thereto, and other risks, uncertainties and factors
disclosed in the most recent report on Form 10-K and reports on Form
10-Q and Forms 8-K of Globalstar Telecommunications Ltd. and
Globalstar, L.P. filed with the Securities and Exchange Commission. We
undertake no obligation to update any forward-looking statement.