The new investor is New Valley Group, a NASDAQ-listed company which is currently involved mostly in commercial real estate and is seeking to acquire additional operating companies. The principals of New Valley have owned and operated a number of telecom companies in the past, including Western Union. (Incidentally, the New Valley CEO, Bennett LeBow is an MCM3 owner.)

Here is a breakdown of the next steps for Globalstar. The Bankruptcy Court in Delaware will first review New Valley's overall plan, a process that is expected to take 2-3 weeks. Once the court gives its approval, New Valley would begin debtor-in-possession ("DIP") financing of $20 million over the course the Chapter 11 and FCC approval process, subject to certain conditions. This DIP financing will give Globalstar the necessary liquidity to continue operations through the remainder of the restructuring process.

From that point forward, Globalstar should complete its restructuring by mid-2003. At that time, Globalstar will emerge from Chapter 11 with essentially no debt, and New Valley will provide an additional $35 million for a total investment of $55 million. In exchange, they will take a controlling interest in the new company.

Globalstar has maintained high-quality, low-cost service without interruption through this entire restructuring process, and now assures us they will continue to do so into the future.

Q: What does this announcement mean for Globalstar as a company?

With the injection of new capital into Globalstar, the company will now have a firm financial foundation, allowing it to resume the expansion and growth of its business. Over the past year, Globalstar has taken a number of important steps to restructure its business, including the acquisition of key gateways and country marketing operations, along with the implementation of a new, more effective business plan. The commitment of new capital from New Valley will now not only enable Globalstar to forward and complete its Chapter 11 restructuring process, but it will also ensure the company's continued operation well into the future.

Q: How do you expect this will affect sales and marketing efforts?

With this new financing, Globalstar will immediately begin work toward further augmenting its marketing and sales efforts around the world. The new, reorganized Globalstar will retain ownership of existing sales and technical operations in North America and Europe, and expects to finalize new business agreements with its service provider partners in all other parts of the world to provide seamless service and support to customers in all locations, particularly businesses with requirements across multiple geographies.

Globalstar now intends to accelerate its program of new product development and service offerings in the months ahead. This work will include particular emphasis on developing next-generation products for maritime, aviation and other specialized markets, building on Globalstar's technical strengths such as multi-channel capabilities and high-quality CDMA signals. Globalstar will also restart its program of gateway deployment, allowing the company to further improve its coverage and service quality.

Q: Will Globalstar customers be affected?

No. Throughout our restructuring process, Globalstar has maintained and even expanded its service for most of its customers with virtually no interruptions. With this new investment, customers can be assured that service will not only continue in the same fashion, but also, over time, we expect to further expand our service and introduce still more products and services.

Q: What will the ownership structure of the new Globalstar look like? How much will New Valley own?

On a fully diluted basis, New Valley would own 50.1% of the new Globalstar company, although the final proportion may be slightly less depending on certain factors. The details are as follows:

At the conclusion of the bankruptcy process later this year, the new plan calls for New Valley to invest a net total of $55 million in the new Globalstar company in exchange for 80.1% of the initial common stock of the new Globalstar company. Globalstar's unsecured creditors would receive 19.9% of the initial common stock.

The creditors will also receive preferred stock and warrants allowing them to purchase, at a future date, additional common stock equal to 37.5% of the common stock of the new company.

Assuming no other changes in the capital structure and no sale of shares by New Valley, New Valley would then own 50.1% of the new company.

The investment agreement and plan of reorganization are also expected to offer GTL shareholders the right to participate in future public offerings by the new company, and they may possibly be eligible to receive warrants for new stock. If approved and fully exercised, this would further dilute New Valley's ownership to slightly below 50%.

Q: Who is New Valley?

New Valley, a Delaware corporation listed on the NASDAQ exchange, is currently engaged in the real estate business through its New Valley Realty division and is seeking to acquire additional operating companies. New Valley can trace its history back to 1851, operating for most of that period under the name “Western Union Corporation”. New Valley sold the Western Union money transfer and messaging services businesses in 1995.

Q: What will New Valley's role be in the new Globalstar? Will there be any management changes?

New Valley's role is expected to be one of corporate oversight. It will initially rely on the Globalstar management team and employees to revise the business plan and implement an operation focused on developing and manufacturing new products. Additional new staff will strengthen market and sales strategies to sell into market segments previously unreachable due to limited resources and to recruit new service providers where Globalstar's network is not providing service today.

Q: New Valley and its parent seem to have little experience in running a telecommunications company? How will Globalstar assure its customers? Does New Valley intend to run Globalstar as a going concern or will they intend to simply break up the assets and sell them for a profit?

New Valley's management team has had considerable management and operations experience in the telecoms area. For example, New Valley oversaw the successful restructuring of Western Union. They have also made it clear that they intend to use their investment in Globalstar to help build and expand the company far beyond where it is today.

Q: Does this mean Globalstar has been sold?

In effect, yes. The original Globalstar partnership will cease to exist and will be replaced by a new corporation, "New Globalstar," which will be controlled by New Valley after the U.S. FCC approves the transfer of Globalstar's licenses. (See also Iridium Q+A below)]

Q: Is this really enough money to restore the company to financial health?

We believe so. With Globalstar's financial health now restored, we will be able to dramatically speed up the expansion of our business. This new investment should give us the time and the resources to grow our customer and revenue base to the point where we reach a cash-flow breakeven point. New Valley is committed to helping us achieve this goal.

Q: Is this plan similar to the restructuring Iridium went through?

No, Globalstar's restructuring is different in a number of ways:

Throughout its restructuring work, Globalstar has been able to maintain uninterrupted, high-quality service for virtually all of its customers. Assuming the New Valley investment plan proceeds and is approved by the Bankruptcy Court, we expect Globalstar to re-emerge from the Chapter 11 process with no significant impact to its service and no effect to its customers. By contrast, after Iridium entered Chapter 11, it suspended service for over a year before a group of investors bought the old company's assets and re-started service as a new company.

Globalstar's restructuring plan envisions continuing service with virtually of its infrastructure, including all but one of its original gateways, in full service, ensuring no loss in service quality. Iridium today operates with two of its original 12 gateways.