-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SUm/Lzfa9la09iJemn4/JvVSMsfCiHy6gxTaE1aEGITqY89b2NOr6xwr8Kuo8Ifx p6SSk7TU6kId/hSXzyezVw== 0000950123-99-000091.txt : 19990111 0000950123-99-000091.hdr.sgml : 19990111 ACCESSION NUMBER: 0000950123-99-000091 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990107 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GLOBALSTAR TELECOMMUNICATIONS LTD CENTRAL INDEX KEY: 0000933401 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 133795510 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-25456 FILM NUMBER: 99503071 BUSINESS ADDRESS: STREET 1: CEDAR HOUSE 41 CEDAR AVENUE STREET 2: HAMILTON CITY: BERMUDA STATE: D0 ZIP: 10016 BUSINESS PHONE: 4412952244 MAIL ADDRESS: STREET 1: 600 THIRD AVENUE CITY: NEW YORK STATE: NY ZIP: 10016 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GLOBALSTAR LP CENTRAL INDEX KEY: 0001037927 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 133759824 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 333-25461 FILM NUMBER: 99503072 BUSINESS ADDRESS: STREET 1: 3200 ZARKEN R STREET 2: PO BOX 640670 CITY: SAN JOSE STATE: CA ZIP: 95164 BUSINESS PHONE: 4089334000 8-K 1 GLOBALSTAR TELECOMMUNICATIONS LTD./GLOBALSTAR L.P. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): January 7, 1999 GLOBALSTAR TELECOMMUNICATIONS LIMITED (Exact name of registrant as specified in its charter) Islands of Bermuda 0-25456 13-3795510 (State or other (Commission (IRS Employer jurisdiction of File Number) Identification incorporation) Number Cedar House, 41 Cedar Avenue, Hamilton, Bermuda HM 12 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (441) 295-2244 GLOBALSTAR, L.P. (Exact name of registrant as specified in its charter) Delaware 333-25461 13-3759824 (State or other (Commission (IRS Employer jurisdiction of File Number) Identification incorporation) Number 3200 Zanker Road, San Jose, California 95134 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (408) 933-4000 2 Item 5. Other Events. On January 7, 1999, Globalstar Telecommunications Limited ("GTL"), a general partner of Globalstar, L.P. ("Globalstar"), announced that it plans to sell $350 million of Convertible Preferred Stock in an offering exempt from registration. Loral Space & Communications Ltd., which owns, directly or indirectly, approximately 42% of Globalstar on a fully-diluted basis, expects to maintain its approximate ownership percentage by purchasing $150 million of the $350 million of Convertible Preferred Stock offered. GTL will apply the net proceeds of the offering to purchase Convertible Preferred Partnership Interests in Globalstar. Globalstar, in turn, will apply the proceeds from the sale of the Convertible Preferred Partnership Interests towards the continued construction and deployment of its worldwide, low-earth orbit satellite-based digital telecommunications system. As of December 31, 1998, Globalstar's budgeted expenditures for the design, construction and deployment of the Globalstar System to commence commercial service by September 1999, including working capital, cash interest on borrowings and operating expenses were approximately $3.3 billion. In addition to expenditures for operating costs, working capital and debt service, Globalstar anticipates additional expenditures on system software for the improvement of system functionality and the addition of new features beyond those planned for the commencement of commercial service and potential cost growth in ground segment costs as a result of additional scope and cost growth. Actual amounts may vary from these estimates and additional funds would be required in the event of unforeseen delays, cost overruns, launch failures, technological risks or adverse regulatory developments or to meet unanticipated expenses. In addition, Globalstar has agreed to purchase eight additional spare satellites and long-lead parts for four additional satellites from SS/L at an estimated cost of $151 million for which payment terms have not as yet been negotiated. It is anticipated that approximately $104 million of this amount will be expended by commencement of commercial service. Further, in order to accelerate the deployment of gateways around the world, Globalstar has agreed to finance approximately $80 million of the cost of up to 32 of the initial 38 gateways. The contract for the 38 gateways is approximately $345 million. In December 1997, Globalstar ordered 40,000 fixed access terminals from Ericsson for $84 million. Further, Globalstar has also agreed to finance approximately $67 million of the cost of handsets. Globalstar expects to recoup the amounts so financed following the acceptance by the service providers of the gateways, fixed access terminals and handsets. As of December 31, 1998 and after the estimated proceeds of the offering, Globalstar will have raised or received commitments for approximately $3.3 billion. Globalstar intends to raise the remaining funds required prior to the initiation of commercial service of approximately $575 million from a combination of sources including: high yield debt issuance (which may include an equity component), equity issuance, financial support from the Globalstar partners, projected service provider payments and anticipated payments from the sale of gateways and Globalstar subscriber terminals. Although Globalstar believes it will be able to obtain these additional funds, there can be no assurance that such funds will be available on favorable terms or on a timely basis, if at all. In addition, substantial additional financing will be required if there are delays in the commencement of commercial service and, in any event, after the commencement of commercial service and before positive cash flow is achieved. If Globalstar fails to commence commercial service as planned, technical or regulatory developments result in a need to modify the design of all or a portion of the Globalstar System, service provider agreements for additional territories are not entered into at the times or on the terms anticipated by Globalstar or other additional costs are incurred, the risk of which is substantial, additional capital will be required. A substantial shortfall in meeting its capital needs would adversely affect completion of the Globalstar System or delay full deployment of all Globalstar satellites. The ability of Globalstar to achieve positive cash flow will depend upon the successful and timely construction and deployment of the Globalstar System, the successful marketing of its services by service providers and the ability of the Globalstar System to successfully compete against other satellite-based telecommunications systems, as to which there can be no assurance. The press release of GTL dated January 7, 1999, a copy of which is attached hereto as Exhibit 99.1, is hereby incorporated by reference. This report contains forward-looking statements, including statements regarding schedules for future satellite launches, commencement of commercial service of the Globalstar system and additional financing. 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 that 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 and GTL. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits. Exhibit 99.1 Press Release of Globalstar Telecommunications Limited dated January 7, 1999 -2- 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. GLOBALSTAR TELECOMMUNICATIONS LIMITED (Registrant) Date: January 8, 1999 By: /s/ Eric J. Zahler -------------------------------- Eric J. Zahler Vice President GLOBALSTAR, L.P. ----------------------------------- (Registrant) By: Loral/QUALCOMM Satellite Services, L.P., its General Partner By: Loral/QUALCOMM Partnership, L.P., its General Partner By: Loral General Partner, Inc. its General Partner Date: January 8, 1999 By: /s/ Eric J. Zahler -------------------------------- Eric J. Zahler Vice President -3- 4 EXHIBIT INDEX Exhibit Description Exhibit 99.1 Press Release of Globalstar Telecommunications Limited dated January 7, 1999 EX-99.1 2 PRESS RELEASE 1 [GLOBALSTAR GRAPHIC] - ------------------------------------------------------------------------------- Globalstar Telecommunications Ltd. 600 Third Avenue New York, NY 10016 Tel: (212) 697-1105 Fax: (212) 338-5662 NEWS For Immediate Release Contact: Jeanette Clonan +1-212-338-5658 GLOBALSTAR TO SELL $350,000,000 OF CONVERTIBLE PREFERRED STOCK IN A RULE 144A OFFERING NEW YORK - January 7, 1999 - Globalstar Telecommunications Limited (GTL) announced today that it plans to sell $350 million of Convertible Preferred Stock in an offering exempt from registration. Loral Space & Communications, which owns 42% of Globalstar L.P., will purchase $150 million of the $350 million of Convertible Preferred Stock offered. GTL will apply the proceeds to purchase Convertible Preferred Partnership Interests in Globalstar, L.P. Globalstar L.P., in turn, will apply the proceeds from the sale of the Convertible Preferred Partnership Interests towards the continued construction and deployment of its worldwide, low-earth orbit satellite-based digital telecommunications system. The Preferred Stock will be offered only to qualified institutional buyers pursuant to Rule 144A, and to certain persons in offshore transactions pursuant to Regulation S under the Securities Act of 1933. The Preferred Stock has not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release does not constitute an offer to sell or the solicitation of an offer to buy the securities. # # # -----END PRIVACY-ENHANCED MESSAGE-----