<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 9, 1998
REGISTRATION NO. 333-67731
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GLOBALSTAR TELECOMMUNICATIONS LIMITED
(Exact name of registrant as specified in its charter)
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<TABLE>
<S> <C>
BERMUDA 13-3795510
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
CEDAR HOUSE
41 Cedar Avenue
Hamilton HM12, Bermuda
(441) 295-2244
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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ERIC J. ZAHLER, ESQ.
c/o Loral SpaceCom Corporation
600 Third Avenue
New York, New York 10016
(212) 697-1105
(Name, address, including zip code and telephone number, including area code, of
agent for service)
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With a Copy to:
BRUCE R. KRAUS, ESQ.
WILLKIE FARR & GALLAGHER
787 Seventh Avenue
New York, New York 10019
(212) 728-8000
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APPROXIMATE DATE OF THE COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ______________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ______________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
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<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED DECEMBER 9, 1998
PROSPECTUS
717,600 SHARES OF COMMON STOCK
GLOBALSTAR TELECOMMUNICATIONS LIMITED
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By this Prospectus, certain stockholders of Globalstar Telecommunications
Limited ("GTL") described in this Prospectus are offering for resale 717,600
shares of GTL common stock.
Each of the selling stockholders acquired the shares of GTL common stock
from Loral Space & Communications Ltd. ("Loral") on November 5, 1998 in
connection with the exchange of limited partnership interests in Globalstar,
L.P. ("Globalstar") for GTL common stock.
The selling stockholders may sell their GTL common stock directly to
purchasers or through agents, underwriters or dealers. Additional information
about the distribution of these shares can be found in this Prospectus under the
heading "Plan of Distribution." If required, we will describe the plan of
distribution for any particular offering of GTL common stock in an accompanying
prospectus supplement.
GTL's common stock is listed on the Nasdaq National Market under the symbol
"GSTRF." On December 8, 1998, the last reported sale price of GTL's common stock
on the Nasdaq National Market was $20 per share.
We have not registered the GTL common stock for sale under the securities
laws of any state or jurisdiction as of the date of this Prospectus. Brokers or
dealers effecting transactions in GTL common stock should confirm the
registration under the securities laws of the state in which such transactions
occur, or the existence of any exemption from registration.
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POTENTIAL INVESTORS SHOULD CAREFULLY CONSIDER, AMONG OTHER THINGS, THE
INFORMATION PRESENTED IN "RISK FACTORS" BEGINNING ON PAGE 2.
---------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THESE SECURITIES OR DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
December , 1998
<PAGE> 3
THIS PROSPECTUS IS PART OF A REGISTRATION STATEMENT THAT WE HAVE FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION" OR THE "SEC"). THE
REGISTRATION STATEMENT INCLUDES EXHIBITS AND ADDITIONAL INFORMATION NOT INCLUDED
IN THIS PROSPECTUS.
YOU SHOULD NOT RELY ON ANY INFORMATION ABOUT GTL THAT IS NOT CONTAINED IN
THIS PROSPECTUS OR IN ONE OF GTL'S PUBLIC REPORTS FILED WITH THE COMMISSION AND
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS. NEITHER GTL NOR THE SELLING
HOLDERS (AS DEFINED IN THIS PROSPECTUS) HAS AUTHORIZED ANY PERSON TO MAKE ANY
REPRESENTATIONS FOR GTL OR TO PROVIDE YOU WITH ANY INFORMATION DIFFERENT FROM
THAT CONTAINED IN THIS PROSPECTUS. INFORMATION IN THIS PROSPECTUS OR IN GTL'S
PUBLIC REPORTS MAY BECOME STALE. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN
THIS PROSPECTUS IS ACCURATE OR COMPLETE AS OF ANY DATE OTHER THAN THE DATE ON
THE FRONT OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS OR ANY SALE OF THESE SECURITIES. THIS PROSPECTUS IS NOT AN OFFER TO
SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
TABLE OF CONTENTS
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PAGE
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Where you can find more information......................... i
Forward-looking Statements.................................. ii
Prospectus Summary.......................................... 1
Risk Factors................................................ 2
Use of Proceeds............................................. 3
Selling Holders............................................. 4
Plan of Distribution........................................ 4
Taxation.................................................... 5
Legal Opinions.............................................. 8
Experts..................................................... 8
</TABLE>
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Commission a registration statement on Form S-3
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the securities offered in this Prospectus. As permitted by the
Commission's rules and regulations, we have not included certain portions of the
registration statement in this Prospectus. For further information, you should
refer to the registration statement and its exhibits. We are also subject to the
informational requirements of the Securities Act of 1934 (the "Exchange Act"),
and we therefore file annual, quarterly and current reports, proxy statements
and other information with the Commission.
You may inspect and copy the registration statement and exhibits, and any
reports and other information that we have filed with the Commission, at the
public reference facilities maintained by the Commission at its principal
offices at 450 Fifth Street, N.W., Washington, D.C. 20549; and its regional
offices at Seven World Trade Center, 13th Floor, New York, New York, 10048 and
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661. You may
obtain further information on the operation of the public reference facilities
by calling the Commission at 1-800-SEC-0330. Information which we have filed
with the Commission is also available at the Commission's Website at
http://www.sec.gov. You can request copies of this information, upon payment of
prescribed fees, by writing to the Commission. The common stock of GTL is also
quoted on the Nasdaq National Market, and copies of all information that we have
filed with the Commission may be inspected at the offices of Nasdaq Operations,
1735 K Street, N.W., Washington, D.C. 20006.
The Commission allows us to incorporate by reference into this Prospectus
the information that we file with the Commission, which means that we can
disclose important information to you by referring you to those documents. The
information incorporated by reference is considered to be a part of this
Prospectus, unless we update or supersede that information with the information
contained in this Prospectus or a prospectus supplement or by information that
we file subsequently that is incorporated by reference into this Prospectus
(provided, however, that the information referred to in item 402(a)(8) of
Regulation S-K of the
i
<PAGE> 4
Commission, relating to certain reports and performance graphs which may be
included in GTL's Proxy Statement for its annual meeting, shall not be deemed
specifically incorporated by reference herein). Information that we file
subsequently with the Commission will automatically update and supersede the
information previously incorporated by reference. We are incorporating by
reference into this Prospectus the following documents and our future filings
with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act, until the offering of the Common Stock under this Prospectus is completed:
(a) Annual Report on Form 10-K of GTL and Globalstar for the year
ended December 31, 1997 (except for the consolidated financial statements
of GTL and Globalstar);
(b) Quarterly Report on Form 10-Q of GTL and Globalstar for the
quarter ended March 31, 1998;
(c) Quarterly Report on Form 10-Q of GTL and Globalstar for the
quarter ended June 30, 1998;
(d) Quarterly Report on Form 10-Q of GTL and Globalstar for the
quarter ended September 30, 1998;
(e) Proxy Statement of GTL relating to the 1998 Annual Meeting of
Stockholders;
(f) Current Report on Form 8-K of GTL and Globalstar, filed May 1,
1998;
(g) Current Report on Form 8-K/A of GTL and Globalstar, filed May 5,
1998;
(h) Current Report on Form 8-K/A of GTL and Globalstar, filed May 26,
1998;
(i) Current Report on Form 8-K of GTL and Globalstar, filed June 9,
1998;
(j) Current Report on Form 8-K of GTL and Globalstar, filed September
10, 1998;
(k) Current Report on Form 8-K of GTL and Globalstar, filed September
22, 1998;
(l) the description of GTL's Common Stock contained in GTL's
Registration Statement on Form 8-A filed under the Exchange Act and any
amendments or reports filed for the purpose of updating such description;
and
(m) the consolidated financial statements of GTL and Globalstar
contained in Amendment No. 1 to Registration Statement No. 333-57749 of
Globalstar and Globalstar Capital Corporation filed under the Securities
Act.
You may inspect and copy any of the materials that we have filed with the
Commission and which are incorporated by reference in this Prospectus at the
Commission public reference facilities located at the addresses listed above.
Furthermore, we will provide without charge a copy of any or all of the
documents incorporated by reference in this Prospectus (other than exhibits and
schedules to these filings, unless such exhibits or schedules are specifically
incorporated by reference into the information that this Prospectus
incorporates) to each person to whom a copy of this Prospectus has been
delivered. You should direct written or oral requests for such copies to:
Globalstar Telecommunications Limited, Cedar House, 41 Cedar Avenue, Hamilton
HM12, Bermuda, Attn: Secretary, (441) 295-2244. You can find additional
information about GTL at our Website at http://www.globalstar.com.
FORWARD-LOOKING STATEMENTS
The statements contained in this Prospectus that are not historical facts
are "forward looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act, which can be identified by
the use of forward-looking terminology such as "believes," "expects," "may,"
"will," "should," or "anticipates" or the negative thereof or other variations
thereon or comparable terminology, or by discussions of strategy that involve
risks and uncertainties. GTL's actual results, performance or achievements could
differ materially from the results expressed in, or implied by, these
forward-looking statements. Potential risks and uncertainties that could affect
GTL's future operating results include, without limitation; uncertainties
regarding implementation of business strategies; technology risks; changes in
the regulatory environment affecting GTL; and actions of GTL's competitors and
other factors set forth under "Risk Factors."
ii
<PAGE> 5
PROSPECTUS SUMMARY
The following is only a summary of some of the important terms of the
offering described in this Prospectus. The main body of this Prospectus, as well
as documents and financial statements that are incorporated by reference into
this Prospectus, contain more detailed information regarding Globalstar
Telecommunications Limited and Globalstar, L.P. We refer in this Prospectus to
Globalstar Telecommunications Limited as "GTL", to Globalstar, L.P. as
"Globalstar" and to the common stock of GTL, par value $1.00 per share, as the
"Common Stock."
On June 8, 1998, GTL issued a two-for-one stock split to shareholders of
record as of May 29, 1998 in the form of a 100% stock dividend. Accordingly, all
GTL share and purchase amounts have been restated to reflect the two-for-one
split. Restated net loss per share for the years ending December 31, 1995, 1996
and 1997 were $0.32, $0.38 and $0.43, respectively.
THE OFFERING
Issuer..................... GTL, a Bermuda company, is the issuer of the shares
of Common Stock covered by this Prospectus. GTL is
a general partner of Globalstar. Globalstar is a
Delaware limited partnership that is building a
low-earth orbit satellite based telecommunications
system. GTL's only asset is its general partnership
interest in Globalstar. GTL was organized on
November 23, 1994, and its principal offices are
located at Cedar House, 41 Cedar Avenue, Hamilton
HM 12, Bermuda. GTL's telephone number is (441)
295-2244.
Securities Offered......... 717,600 shares of Common Stock of GTL owned by
Dacom Corporation and Dacom International, Inc.,
which we will refer to as the "Dacom Shares." We
will refer to the holders of the Dacom Shares as
the "Selling Holders." This Prospectus covers the
offer and sale of the Dacom Shares by the Selling
Holders.
Listing of Common Stock.... GTL's Common Stock currently trades on the Nasdaq
National Market under the symbol GSTRF.
Registration Rights........ GTL will keep this Prospectus effective either
until the Dacom Shares are sold or until they may
be sold free of restrictions imposed by the federal
securities laws, whichever occurs first.
Use of Proceeds............ The Selling Holders will receive all proceeds from
the sale of the Dacom Shares. GTL will not receive
any of the sale proceeds.
<PAGE> 6
RISK FACTORS
INVESTORS SHOULD CONSIDER THE RISK FACTORS DESCRIBED BELOW IN DECIDING
WHETHER OR NOT TO PURCHASE THE DACOM SHARES. IN ADDITION, INVESTORS SHOULD
CONSIDER THE FACTORS AND OTHER INFORMATION CONTAINED IN THE SEC REPORTS OF GTL
AND GLOBALSTAR THAT ARE INCORPORATED IN THIS PROSPECTUS BY REFERENCE, INCLUDING
THOSE FACTORS CONTAINED IN THE SECTION OF THE 1997 FORM 10-K OF GTL AND
GLOBALSTAR ENTITLED "CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS." IN
PARTICULAR, INVESTORS ARE REFERRED TO THE CURRENT REPORT ON FORM 8-K OF GTL AND
GLOBALSTAR FILED ON SEPTEMBER 22, 1998 AND THE INFORMATION CONTAINED IN THE
SECTION OF THE FORM 10-Q OF GTL AND GLOBALSTAR FOR THE QUARTER ENDED SEPTEMBER
30, 1998 ENTITLED "LIQUIDITY AND CAPITAL RESOURCES" FOR MORE INFORMATION
RELATING TO THE EFFECTS OF THE LAUNCH FAILURE ON SEPTEMBER 9, 1998 OF A ZENIT 2
ROCKET CARRYING 12 GLOBALSTAR SATELLITES.
Loral's Control of Globalstar. Loral Space & Communications Ltd. is the
largest single equity owner of Globalstar, owning approximately 42% of
Globalstar on a fully-diluted basis. A committee consisting of representatives
appointed by Loral and independent representatives manages Globalstar. Although
a majority of the representatives on this committee are appointed by Loral, the
independent representatives have the right to approve certain matters before
they are submitted for approval of the Globalstar partners. The independent
representatives also make certain employment decisions regarding the senior
officer positions of Globalstar.
GTL's Loss of General Partner Interest in Globalstar in the Event of a
Change of Control of GTL or Reduction in GTL's Ownership Interest in Globalstar;
Possible Characterization of GTL as an Investment Company. GTL's general
partner interest in Globalstar will be converted to a limited partner interest
and GTL will lose its right to appoint representatives to the committee that
manages Globalstar if either of the following two events occurs: (i) there is a
change of control of GTL at a time when GTL owns less than 50% of the
outstanding Globalstar partnership interests; or (ii) GTL's ownership interest
in Globalstar falls below 5% and this reduction has not been approved by the
managing general partner of Globalstar or the Globalstar partners. If either of
these events were to occur, and, as a result, GTL were to lose its right to
participate in the management of Globalstar, GTL's interest in Globalstar could
be deemed an "investment security" and GTL could be deemed an "investment
company" for purposes of the Investment Company Act of 1940 (the "1940 Act"). If
so, GTL would be subject to the registration and other requirements of the 1940
Act. If GTL had to register under the 1940 Act, GTL might have to reincorporate
in the United States and would become subject to United States tax on its
worldwide income, subject to applicable foreign tax credits. GTL and Globalstar
intend, however, to conduct their operations in a manner that will not result in
GTL becoming subject to the 1940 Act.
No Dividends or Distributions Paid or Expected. GTL has never declared or
paid a cash dividend and Globalstar has not made any distributions on its
ordinary partnership interests to its partners. In the future, neither GTL nor
Globalstar anticipate paying any dividends or making any distributions before
the date on which Globalstar achieves positive cash flow.
GTL's Operating Expenses. GTL's only asset is its general partner interest
in Globalstar. GTL has no independent means of generating revenues. Globalstar
pays GTL's operating expenses, which are generally not material in amount.
GTL Subject to General Partner Liability. As a general partner of
Globalstar, GTL is jointly and severally liable with the other general partner
of Globalstar for Globalstar's obligations to the extent Globalstar is unable to
pay.
Rights of Shareholders under Bermuda Law Different from Rights under U.S.
Law. Since GTL is a Bermuda company, the principles of law that govern
shareholder rights and other governance matters are different from those that
would apply if GTL were a U.S. company. For example, it is not certain whether a
Bermuda court would enforce liabilities against GTL or its officers and
directors predicated upon United States securities laws either in an original
action in Bermuda or under a judgment obtained in the United States.
2
<PAGE> 7
Certain Tax Considerations -- PFIC Risk and Risk of Foreign
Taxation. Special U.S. tax rules apply to U.S. taxpayers that own stock in a
"passive foreign investment company," known as a PFIC. If GTL were to be
classified as a PFIC, a U.S. shareholder would be subject, at his election,
either to (i) a current tax on undistributed earnings or (ii) a tax deferral
charge on certain distributions and on gains from a sale of GTL shares (which
will be taxed as ordinary income). In addition, GTL expects that a significant
portion of its income will not be subject to tax by the United States, Bermuda
or by the countries from which it derives income. The extent to which certain
foreign jurisdictions, however, may require GTL to pay tax or to make payments
in lieu of tax cannot be determined in advance.
Shares Eligible for Future Sale. As of October 30, 1998, the number of
shares of GTL Common Stock outstanding was 82,015,931. In addition, as of
September 30, 1998, (i) holders of outstanding GTL warrants have the right to
exercise their warrants for 4,069,325 shares of GTL Common Stock, (ii)
Globalstar partners have the right, under certain circumstances, to exchange
their Globalstar partnership interests for approximately 151,750,000 shares of
GTL Common Stock, (iii) Globalstar employees have been granted, but have not yet
exercised, options to purchase 1,609,140 shares of GTL Common Stock, and (iv)
under its stock option plan, GTL may in the future grant to Globalstar employees
options to purchase up to an additional 865,800 shares of Common Stock. In
addition, GTL has agreed to register by July 1999 8.4 million shares of Common
Stock owned by persons or entities advised by or associated with Soros Fund
Management L.L.C. Sales of substantial amounts of Common Stock in the public
market, or the perception that such sales could occur, could adversely affect
the market price of the Common Stock.
Volatility. The market price of the Common Stock has been and may continue
to be volatile. In particular, the trading prices of the common stock of many
technology companies have reflected extreme price and volume fluctuations which
have not necessarily been related to operating performance. The future trading
price of the Common Stock may be adversely affected by the financial performance
or operating results of Globalstar or its competitors, the market conditions for
growth stocks or technology stocks, general economic trends or other factors
which Globalstar cannot predict or control. In particular, variations in
Globalstar's prospects and operating results could be caused by delays in the
design, construction, deployment, customer acceptance and commercial operation
of the Globalstar System; delays in obtaining service providers or regulatory
approvals in particular countries; launch failures; general conditions in the
telecommunications industry; regulation; international events; changes in
interest rates and other factors. Any such variations in Globalstar's prospects
and operating results may adversely affect the future trading price of the
Common Stock.
Dilution. Globalstar expects to fund its remaining capital requirements
from a combination of sources including debt issuance (which may include an
equity component), exercise of warrants, financial support from the partners,
service provider payments, service revenues from operations, and payments from
the sale of gateways and user terminals. Globalstar may, subject to certain
preemptive and approval rights of its other partners, sell equity interests
(either directly or through the issuance of warrants, or convertible debt
securities), which would dilute the percentage ownership in Globalstar
represented by the Dacom Shares. Globalstar may also issue additional
partnership interests to new or existing partners, an action which would dilute
the ownership of other partners. The issuance of additional partnership
interests at prices lower than the price at which GTL may purchase them would
further dilute GTL. Ordinary partnership interests in Globalstar are
convertible, over a period of years following the date on which Globalstar
commences commercial operations and after at least two consecutive reported
fiscal quarters of positive net income, into Common Stock, subject to certain
restrictions, on an approximate one-for-four basis, subject to adjustment.
USE OF PROCEEDS
The Selling Holders will receive all proceeds from the sale of the Dacom
Shares. GTL will not receive any of the sale proceeds.
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<PAGE> 8
SELLING HOLDERS
The Selling Holders acquired the Dacom Shares from Loral on November 5,
1998 pursuant to an Exchange Agreement, dated as of September 28, 1998, in
exchange for limited partnership interests in Globalstar. The Selling Holders
may from time to time offer and sell the Dacom Shares set forth below pursuant
to this Prospectus.
The following table sets forth as of December 9, 1998 the respective number
of Dacom Shares beneficially owned by each Selling Holder. The term "Selling
Holders" includes the holders listed below and the beneficial owners of the
Dacom Shares and their pledgees, donees or other successors. Dacom Corporation
has been granted by Globalstar the right to act as an exclusive Globalstar
service provider in two countries, including South Korea, and is a limited
partner in Globalstar. Except as set forth above, other than as a result of the
ownership of the Dacom Shares, none of the Selling Holders has, or within the
past three years has had, any position, office or material relationship with GTL
or any of its predecessors or affiliates. The table has been prepared based upon
information furnished to GTL by or on behalf of the Selling Holders.
<TABLE>
<CAPTION>
COMMON STOCK
OWNED PRIOR TO
SELLING HOLDERS THE OFFERING
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<S> <C>
Dacom Corporation........................................... 713,700
Dacom International, Inc.................................... 3,900
</TABLE>
The information concerning the Selling Holders may change from time to
time. If required, such changes will be set forth in accompanying supplements to
this Prospectus ("Prospectus Supplements"). Because the Selling Holders may
offer all or some portion of the Common Stock pursuant to this Prospectus, and
because there are currently no agreements, arrangements or understandings with
respect to the sale of Common Stock, we cannot predict the number of shares of
Common Stock that will be held by the Selling Holders upon termination of this
offering.
PLAN OF DISTRIBUTION
The Dacom Shares offered hereby may be sold from time to time to purchasers
directly by the Selling Holders. Alternatively, the Selling Holders may from
time to time offer the Dacom Shares to or through underwriters, broker-dealers
or agents, who may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Holders or the purchasers of Dacom
Shares, for whom they may act as agent. The Selling Holders and any
underwriters, broker-dealers or agents that participate in the distribution of
the Dacom Shares may be deemed to be "underwriters" within the meaning of the
Securities Act and any profit on the sale of Dacom Shares by them and any
discounts, commissions, concessions or other compensation received by any such
underwriter, broker-dealer or agent may be deemed to be underwriting discounts
and commissions under the Securities Act.
Because the Selling Holders may be deemed to be "underwriters" within the
meaning of the Securities Act, the Selling Holders will be subject to the
prospectus delivery requirements of the Securities Act. GTL has informed the
Selling Holders that the anti-manipulative provisions of Regulation M
promulgated under the Exchange Act may apply to their sales in the market.
The Dacom Shares offered hereby may be sold from time to time in one or
more transactions at fixed prices, at prevailing market prices at the time of
sale, at varying prices determined at the time of sale or at negotiated prices.
Such prices will be determined by the Selling Holders or by agreement between
the Selling Holders and underwriters and dealers who may receive fees or
commissions in connection therewith. The sale of the Dacom Shares may be
effected in transactions (which may involve crosses or block transactions) (i)
on any national securities exchange or quotation service on which the Dacom
Shares may be listed or quoted at the time of sale, (ii) in the over-the-counter
market, (iii) in transactions otherwise than on such exchanges or in the
over-the-counter market or (iv) through the writing of options. At the time a
particular offering of Dacom Shares is made, a Prospectus Supplement, if
required, will be distributed which will set forth the aggregate amount and type
of Dacom Shares being offered and the terms of the offering, including the name
4
<PAGE> 9
or names of any underwriters, broker-dealers or agents, any discounts,
commissions and other terms constituting compensation from the Selling Holders
and any discounts, commissions or concessions allowed or reallowed or paid to
broker-dealers.
To comply with the securities laws of certain jurisdictions, if applicable,
the Dacom Shares will be offered or sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain jurisdictions
the Dacom Shares may not be offered or sold (unless they have been registered or
qualified for sale) in such jurisdictions or an exemption from registration or
qualification is available and is complied with.
All expenses of the registration of the Dacom Shares will be paid by GTL,
including, without limitation, Commission filing fees; provided, however, that
the Selling Holders will pay all underwriting discounts, selling commissions and
related fees, if any. Holders of Dacom Shares and GTL have agreed to indemnify
each other against certain liabilities, including certain liabilities arising
under the Securities Act. GTL's Common Stock, including the Dacom Shares, are
listed on the Nasdaq National Market.
Loral has agreed under the Exchange Agreement to cause GTL to cause this
Registration Statement to remain effective until the earlier of (i) the date
that all the Dacom Shares shall have been sold pursuant to this Registration
Statement or (ii) the date on which the Dacom Shares shall no longer constitute
restricted securities pursuant to Rule 144(k) of the Securities Act.
TAXATION
The following discussion is a summary of certain material federal income
tax considerations relevant to the acquisition, ownership and disposition of the
Dacom Shares by holders acquiring Dacom Shares. This does not purport to be a
complete analysis or listing of all potential tax considerations that may be
relevant to holders. The discussion does not include the special rules that may
apply to certain holders (including insurance companies, tax-exempt
organizations, financial institutions or broker-dealers, foreign corporations
and persons who are not citizens or residents of the United States), and does
not address the tax consequences of the laws of any state, locality or foreign
jurisdiction. The discussion is based upon currently existing provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), existing and proposed
Treasury regulations promulgated thereunder and current administrative rulings
and court decisions, all of which are subject to change and any such change
could affect the continuing validity of this discussion. There can be no
assurance that the IRS will not take a different position concerning the tax
consequences of the acquisition, ownership or disposition of the Dacom Shares or
that any such IRS position would not be sustained. This discussion applies only
to a holder that will hold Dacom Shares as "capital assets" within the meaning
of Section 1221 of the Code.
EACH PURCHASER IS URGED TO CONSULT HIS OWN TAX ADVISER AS TO THE PARTICULAR
TAX CONSEQUENCES OF ACQUIRING, OWNING AND DISPOSING OF THE DACOM SHARES,
INCLUDING THE APPLICABILITY AND EFFECT OF ANY FEDERAL, STATE OR FOREIGN INCOME
AND OTHER TAX LAWS.
UNITED STATES FEDERAL INCOME TAXATION OF U.S. HOLDERS
This section discusses certain rules applicable to a holder of Dacom Shares
that is a United States Holder. For purposes of this discussion, a "United
States Holder" means a holder of Dacom Shares who or which is (i) an individual
who is a citizen or resident of the United States for U.S. Federal income tax
purposes, (ii) a corporation or other entity taxable as a corporation created or
organized in the United States or under the laws of the United States or any
political subdivision thereof (including the States and the District of
Columbia), (iii) an estate or trust described in Section 7701(a)(30) of the Code
or (iv) a person whose worldwide income or gain is otherwise subject to U.S.
Federal income taxation on a net income basis.
General Rules. Subject to the discussion of PFICs below, a United States
Holder of Dacom Shares will recognize gain or loss upon the sale or other
taxable disposition of the Dacom Shares in an amount equal to the difference
between the amount of cash and fair market value of property received and the
holder's adjusted tax basis in the Dacom Shares. Such gain or loss generally
will be capital gain or loss and will be long-term capital gain or loss if the
holder has held the Dacom Shares for more than one year.
5
<PAGE> 10
In general, upon redemption or repurchase by GTL of the Dacom Shares, a
United States Holder will recognize capital gain or loss in an amount equal to
the difference between the amount realized in the redemption or repurchase and
the holder's adjusted tax basis in such Dacom Shares. In certain limited
circumstances, however, such a holder may be required to treat the redemption or
repurchase payments as a dividend to the extent of GTL's undistributed current
or accumulated earnings and profits. In such a case, a holder may not be
entitled to recognize a loss. The limited circumstances are primarily those
involving holders of GTL Common Stock whose proportionate interests in GTL
remain the same or increase after the redemption and, in the case of a holder of
GTL Common Stock with significant percentage interests in GTL, whose interests
in GTL are not materially reduced by the redemption or repurchase.
Regular dividend distributions by GTL to holders of Dacom Shares will be
includible in the income of a U.S. Holder to the extent of GTL's undistributed
current and accumulated earnings and profits.
PFIC Rules. Special rules apply to the taxation of a "passive foreign
investment company" (a "PFIC"). A PFIC is a foreign corporation (i) 75% or more
of whose income is passive or (ii) 50% or more of whose assets produce or are
held to produce passive income. GTL believes that it has not been and will not
become a PFIC. In particular, GTL expects to earn, through Globalstar,
sufficient active business income to avoid PFIC status. However, Globalstar may
earn passive income such as interest on working capital and royalties on certain
intangibles. Furthermore, the extent and timing of Globalstar's active business
income cannot be predicted with certainty.
If GTL is or were to become a PFIC, a United States Holder would be subject
to a tax-deferral charge on gains on a sale of shares of Common Stock and on
certain "excess distributions" received from GTL, and such gains and excess
distributions will be taxable at ordinary income rates, unless the United States
Holder makes the QEF election described below. The amount of the charges will
depend, in part, on the period during which the shareholders held their shares
of Common Stock.
If a United States Holder makes the qualified electing fund ("QEF")
election provided in Section 1295 of the Code, the shareholder will be required
to include its pro rata share of GTL's ordinary earnings and net capital gain in
income for tax purposes for each taxable year (regardless of when or whether
cash attributable to such income is actually distributed to such shareholder by
GTL). If the United States Holder makes a QEF election, the tax-deferral charge
and ordinary income rules described in the preceding paragraph will not apply.
Actual distributions out of amounts so included in income will not be taxable to
the United States Holder. A United States Holder's tax basis in its shares of
Common Stock will be increased by the amount so included and decreased by the
amount of nontaxable distributions.
The QEF election is effective only if certain required information is made
available by GTL to the IRS. In the event GTL is characterized as a PFIC for
federal income tax purposes, GTL will undertake to comply with the IRS
information requirements necessary to permit United States Holder to make the
election, and provide to each United States Holder information needed for the
determination of such United States Holder's pro rata share of GTL's ordinary
earnings and net capital gain.
To the extent that GTL has undistributed current or accumulated earnings
and profits, payment of a dividend on the Common Stock will be taxable dividend
income to a United States Holder. Because GTL is not incorporated in the United
States, the payments that are treated as dividends will not be eligible for the
dividends received deduction.
OTHER UNITED STATES TAX CONSIDERATIONS
Taxation of GTL. GTL is a foreign corporation established for the sole
purpose of acquiring and holding a partnership interest in Globalstar, a
Delaware limited partnership. GTL's tax consequences will result from its status
as a partner in Globalstar. As a partnership, Globalstar itself will not be
subject to federal income taxation. Generally, its partners will be taxed as if
they directly expended their share of Globalstar expenditures and directly
realized their share of Globalstar income. GTL expects, based on Globalstar's
description of its proposed activities, that most of GTL's income will be from
sources outside the United States and that such income will not be effectively
connected with the conduct of a trade or business within
6
<PAGE> 11
the United States ("Foreign Income"). Thus, there generally will be no U.S.
taxes on GTL's share of Globalstar's Foreign Income. The Internal Revenue
Service may disagree and/or promulgate regulations that would recharacterize a
substantial portion of GTL's share of Globalstar's income as from U.S. sources
and/or as effectively connected with the conduct by GTL of a trade or business
in the United States so as to subject that income to regular U.S. income and
branch profits taxes.
GTL will be subject to U.S. tax at regular U.S. federal, state and local
corporate rates on GTL's share of Globalstar's income which is effectively
connected with the conduct of a trade or business in the United States ("U.S.
Income"), and will be required to file federal, state and local income tax
returns with respect to such U.S. Income. Globalstar is obligated to provide the
information required for GTL to prepare its federal, state and local income tax
returns. Globalstar intends to make pro rata cash distributions, to the extent
of available funds, to all partners until the partners, such as GTL, have been
distributed an amount sufficient to enable them to pay the federal, state and
local income taxes on their share of Globalstar's U.S. Income. This requirement
to distribute to partners for federal income taxes may be satisfied by a
withholding tax payment made by Globalstar to the U.S. Treasury. The amount
withheld may exceed the amount of GTL's federal income tax liability and GTL
would then be entitled to seek a refund from the U.S. Treasury for the excess
amount. In addition to the regular U.S. taxes, GTL will be subject to a United
States branch profits tax (currently 30%) on actual or deemed withdrawals of its
share of Globalstar's U.S. Income.
Taxation of Non-U.S. Investors in GTL. GTL expects that most of its income
will be from sources outside the United States and will not be effectively
connected with a U.S. trade or business. Thus, a holder who is not a United
States Holder (a "Non-U.S. Holder") will not be subject to U.S. federal taxation
on distributions received from GTL unless (i) those distributions are
effectively connected with the conduct by such Non-U.S. Holder of a trade or
business in the United States or (ii) 25% or more of GTL's gross income for the
3-year period ending with the close of GTL's taxable year preceding the
declaration of a distribution was effectively connected with the conduct by GTL
of a trade or business within the United States. In addition, such Non-U.S.
Holder will not be subject to U.S. federal taxation on gains realized by such
Non-U.S. Holder on a sale or exchange of shares of Common Stock unless (i) gain
from the sale of such shares is (a) attributable to an office or fixed place of
business maintained by such Non-U.S. Holder in the United States or (b)
effectively connected with the conduct by such Non-U.S. Holder of a trade or
business in the United States or (ii) in the case of an individual Non-U.S.
Holder, such Non-U.S. Holder is present in the United States for 183 days or
more in the taxable year of the sale or other disposition and certain other
conditions are satisfied. The determination of whether an investor is engaged in
the conduct of a trade or business in the United States or whether the sale of
an investor's shares of Common Stock is attributable to an office or fixed place
of business of the investor in the United States depends on the facts and
circumstances of each investor's case. Each prospective investor should consult
with his own tax advisor to determine whether his distributions or gains will be
subject to U.S. federal taxation.
BERMUDA TAX CONSIDERATIONS
At the present time, there is no Bermuda income or profits tax, withholding
tax, capital gains tax, capital transfer tax, estate duty or inheritance tax
payable by a Bermuda company or its shareholders, other than shareholders
ordinarily resident in Bermuda. GTL has obtained an assurance from the Minister
of Finance under the Exempted Undertakings Tax Protection Act 1966 that, in the
event that any legislation is enacted in Bermuda imposing any tax computed on
profits or income, or computed on any capital asset, gain or appreciation, or
any tax in the nature of estate duty or inheritance tax, such tax shall not
until March 28, 2016 be applicable to GTL or to any of its operations or to the
shares, debentures or other obligations of GTL except insofar as such tax
applies to persons ordinarily resident in Bermuda and holding such shares,
debentures or other obligations of GTL or any land leased or let to GTL.
Therefore, there will be no Bermuda tax consequences with respect to the sale or
exchange of GTL Stock or with respect to distributions in respect of the Common
Stock. As an exempted company, GTL is liable to pay in Bermuda a registration
fee based upon its authorized share capital and the premium on its issued
shares.
7
<PAGE> 12
TAX CONSIDERATIONS IN OTHER JURISDICTIONS
Based upon its review of current tax laws, including applicable
international tax treaties of certain countries that Globalstar believes to be
among its significant potential markets, GTL expects that a significant portion
of its worldwide income will not be subject to tax by the United States, Bermuda
or by the countries from which it derives its income. However, to the extent
that Globalstar bears a higher foreign tax because any particular partner
(including GTL) is not subject to United States tax on its share of Globalstar's
foreign income, the additional foreign tax will be specifically allocated to
such partner and will reduce amounts distributed to such partner by Globalstar.
LEGAL OPINIONS
Certain United States tax matters described under "Taxation" will be passed
upon for GTL by Willkie Farr & Gallagher, New York, New York, general counsel to
GTL. Certain Bermuda tax matters described under "Taxation" and the validity of
the Dacom Shares offered hereby will be passed upon for GTL by Appleby, Spurling
& Kempe, Hamilton, Bermuda. As of November 30, 1998, partners and counsel in
Willkie Farr & Gallagher beneficially owned approximately 170,000 shares of
Common Stock. Mr. Robert B. Hodes is of counsel to the law firm of Willkie Farr
& Gallagher, and a Director of GTL and Loral and a member of the Audit and
Executive Committees of the Boards of Directors of both GTL and Loral.
EXPERTS
The annual consolidated financial statements of GTL and Globalstar
incorporated in this Prospectus by reference from Amendment No. 1 to
Registration Statement No. 333-57749 of Globalstar and Globalstar Capital
Corporation have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports, which are incorporated herein by reference, and have
been so incorporated in reliance upon the reports of such firm given upon their
authority as experts in auditing and accounting.
8
<PAGE> 13
GLOBALSTAR
TELECOMMUNICATIONS
LIMITED
717,600 SHARES
OF COMMON STOCK
---------------------------
PROSPECTUS
DECEMBER , 1998
---------------------------
<PAGE> 14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses payable by the
Registrant in connection with this offering, other than underwriting discounts
and commissions. All the amounts shown are estimates, except the SEC
registration fee:
<TABLE>
<S> <C>
SEC registration fee...................................... $ 3,155
Printing fees............................................. 10,000
Legal fees and expenses................................... 10,000
Accounting fees and expenses.............................. 5,000
Miscellaneous fees and expenses........................... 1,500
--------
Total................................................ $ 29,655
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Bermuda law permits a company to indemnify its directors and officers,
except for any act of fraud or dishonesty. The Registrant has provided in its
Bye-Laws that its directors and officers will be indemnified and held harmless
against any expenses, judgments, fines, settlements and other amounts incurred
by reason of any act or omission in the discharge of their duty, other than in
the case of fraud or dishonesty.
Bermuda law and the Bye-Laws of the Registrant also permit the Registrant
to purchase insurance for the benefit of its directors and officers against any
liability incurred by them for the failure to exercise the requisite care,
diligence and skill in the exercise of their powers and the discharge of their
duties, or indemnifying them in respect of any loss arising or liability
incurred by them by reason of negligence, default, breach of duty or breach of
trust.
The Registrant has entered into indemnification agreements with its
officers and directors. To the extent permitted by law, the indemnification
agreements may require the Registrant, among other things, to indemnify such
officers and directors against certain liabilities that may arise by reason of
their status or service as directors (other than liabilities arising from
willful misconduct of a culpable nature) and to advance their expenses incurred
as a result of any proceedings against them as to which they could be
indemnified.
The Registrant maintains a directors' and officers' liability insurance
policy.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<S> <C>
5+ -- Opinion of Appleby, Spurling & Kempe.
8.1+ -- Tax Opinion of Willkie Farr & Gallagher.
8.2+ -- Tax Opinion of Appleby, Spurling & Kempe (included in their
opinion filed as Exhibit 5).
23.1+ -- Consent of Deloitte & Touche LLP.
23.2+ -- Consent of Appleby, Spurling & Kempe (included in their
opinion filed as Exhibit 5).
23.3+ -- Consent of Willkie Farr & Gallagher (included in their
opinion filed as Exhibit 8.1).
24++ -- Powers of attorney (included in Signature Page).
</TABLE>
- ---------------
+ Filed herewith.
++ Previously filed.
II-1
<PAGE> 15
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding), is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-2
<PAGE> 16
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON DECEMBER 9, 1998.
GLOBALSTAR TELECOMMUNICATIONS LIMITED
By: *
------------------------------------
Gregory J. Clark
Vice Chairman of the Board and
President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
* Chairman of the Board and Chief December 9, 1998
- --------------------------------------------------- Executive Officer (Principal
Bernard L. Schwartz Executive Officer)
* Vice Chairman of the Board and December 9, 1998
- --------------------------------------------------- President
Gregory J. Clark
* Senior Vice President, Chief December 9, 1998
- --------------------------------------------------- Financial Officer and Director
Michael P. DeBlasio (Principal Financial Officer)
* Director December 9, 1998
- ---------------------------------------------------
Robert B. Hodes
* Director December 9, 1998
- ---------------------------------------------------
Sir Ronald Grierson
Director
- ---------------------------------------------------
E. John Peett
* Director December 9, 1998
- ---------------------------------------------------
Michael B. Targoff
* Director December 9, 1998
- ---------------------------------------------------
A. Robert Towbin
* Vice President and Controller December 9, 1998
- --------------------------------------------------- (Principal Accounting Officer)
Harvey B. Rein
*By: /s/ ERIC J. ZAHLER
---------------------------------------------
Eric J. Zahler
Attorney-In-Fact
</TABLE>
II-3
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<S> <C>
5+ -- Opinion of Appleby, Spurling & Kempe.
8.1+ -- Tax Opinion of Willkie Farr & Gallagher.
8.2+ -- Tax Opinion of Appleby, Spurling & Kempe (included in their
opinion filed as Exhibit 5).
23.1+ -- Consent of Deloitte & Touche LLP.
23.2+ -- Consent of Appleby, Spurling & Kempe (included in their
opinion filed as Exhibit 5).
23.3+ -- Consent of Willkie Farr & Gallagher (included in their
opinion filed as Exhibit 8.1).
24++ -- Powers of Attorney (included in Signature Page).
</TABLE>
- ---------------
+ Filed herewith.
++ Previously filed.
<PAGE> 1
EXHIBIT 5
[LETTERHEAD OF APPLEBY SPURLING & KEMPE]
9 December, 1998
The Directors
Globalstar Telecommunications Limited
Cedar House
41 Cedar Avenue
Hamilton HM12
Bermuda
Dear Sirs,
GLOBALSTAR TELECOMMUNICATIONS LIMITED
We have acted as Bermuda legal advisers to Globalstar Telecommunications
Limited, a Bermuda exempted company (the "Company"). We have been requested to
render this opinion as to Bermuda law in connection with Amendment No. 1 to Form
S-3 Registration Statement (Registration No. 333-67731) (the "Registration
Statement") filed with the United States Securities and Exchange Commission on 9
December 1998 relating to the resale by Dacom Corporation and Dacom
International Inc. of 717,600 shares of common stock, $1.00 par value, of the
Company (the "Shares").
For the purposes of this opinion, we have been supplied with and reviewed a
copy of the Registration Statement and have relied upon the Memorandum of
Association and Bye-Laws of the Company and such other documents, certificates
and records, and have made such investigations as we have deemed necessary or
appropriate in order to give the opinion expressed herein. As to various
questions of fact, we have relied on statements and certificates of officers and
representatives of the Company.
We have assumed: --
(i) the truth, accuracy and completeness as the date of hereof of all
representations as to factual matters made in the documents which we have
examined;
(ii) the genuineness of all signatures on the documents which we have
examined; and
(iii) the conformity to original documents of all documents produced
to us as copies and the authenticity of all original documents which, or
copies of which, have been submitted to us.
Based upon and subject to the foregoing and subject to the reservations
mentioned below and to any matters not disclosed to us, we are of the opinion
that: --
(i) the Company is a company duly incorporated and validly existing
under Bermuda law;
(ii) the Company has full power and authority, and has obtained all
Bermuda governmental authorisations, licenses, permits, certificates and
approvals as are necessary to own its properties and to conduct its
business as described in the Registration Statement;
(iii) all the Shares have been duly and validly authorised, issued,
fully paid and non-assessable; and
(vi) the statements set forth in the prospectus forming part of the
Registration Statement under the headings "Taxation -- Bermuda Tax
Considerations", to the extent that they constitute matters of Bermuda law,
or legal conclusions with respect thereto, have been reviewed by us and are
accurate in all material respects and fairly present the information
disclosed therein in all material respects.
Our reservations are as follows: --
(A) We express no opinion as to any law other than Bermuda law and
none of the opinions expressed herein relates to compliance with or matters
governed by the laws of any jurisdiction other than Bermuda. Where an
obligation is to be performed in a jurisdiction other than Bermuda, a
Bermuda court
<PAGE> 2
may decline to enforce it to the extent that such performance would be
illegal or contrary to public policy under the laws of such other
jurisdiction.
(B) We express no opinion as to the availability of equitable
remedies, such as specific performance or injunctive relief, or as to any
matters which are within the discretion of the Bermuda courts, such as the
award of costs, or questions related to jurisdiction. Further, we express
no opinion as to the validity or binding effect in Bermuda of any waiver of
or obligation to waive any provision of law (whether substantive or
procedural) or any right or remedy arising through circumstances not known
at the time of the filing of the Registration Statement.
(C) Section 9 of the Interest and Credit Charges (Regulation) Act 1975
provides that the Bermuda courts have discretion as to the amount of
interest if any payable on the amount of a judgment after date of judgment.
If the court does not exercise that discretion, then interest will accrue
at the statutory rate which is currently seven per cent per annum.
(D) Where a party is vested with a discretion or may determine a
matter in its opinion, such discretion may have to be exercised reasonably
or such an opinion may have to be based on reasonable grounds.
(E) For the purposes of this opinion: --
(a) the term "fully paid" means, in relation to the issued shares
of a company limited by shares (that is to say, a company having the
liability of its members limited by its Memorandum of Association to the
amount, if any, unpaid on the shares held by them), that members holding
such shares have no liability to make any contribution or other payment
to the company in respect of those shares; and
(b) the term "non-assessable" means, in relation to fully paid
shares of a company, that such member shall not be bound by any
alteration to the Memorandum of Association or to the Bye-Laws of that
company after the date upon which he became a member, if and so far as
the alteration requires him to take, or subscribe for additional shares,
or in any way increases his liability to contribute to the share capital
of, or otherwise to, pay money to the company.
This opinion is governed by Bermuda law and is issued on the basis that it
will not give rise to action in any jurisdiction other than Bermuda. It is
issued solely for the benefit of the addressees in relation to the transaction
described above and is not to be made available to or relied upon by any other
person, firm or entity.
Yours faithfully,
/s/ APPLEBY SPURLING & KEMPE
--------------------------------------
2
<PAGE> 1
EXHIBIT 8.1
December 9, 1998
Globalstar Telecommunications Ltd.
Cedar House
41 Cedar Avenue
Hamilton, HM 12, Bermuda
Ladies and Gentlemen:
We have acted as counsel to Globalstar Telecommunications Limited (the
"Company"), a company organized under the laws of Bermuda, in connection with
the preparation of a Registration Statement on Form S-3 (Registration No.
333-67731) (as amended, the "Registration Statement") relating to the offer and
sale from time to time by the Selling Holders named in the Registration
Statement of up to 717,600 shares of the common stock of the Company, par value
$1.00 per share (the "Securities").
In so acting, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of the Registration Statement and such corporate
records, agreements, documents and other instruments as we have deemed necessary
for the purpose of this opinion. We have also examined such other documents,
papers, statutes and authorities as we have deemed necessary to form a basis for
the opinion hereinafter expressed.
In our examination, we have assumed the genuineness of all signatures and
the conformity to original documents of all copies submitted to us. As to
various questions of fact material to our opinion, we have relied on statements
and certificates of officers and representatives of the Company and public
officials.
Based upon the foregoing and having regard for such legal questions as we
have deemed relevant, the legal conclusions set forth in the discussion of U.S.
tax law under the headings "Taxation -- United States Federal Income Taxation of
U.S. Holders" and "Taxation -- United States Tax Considerations" are our
opinions, and it is our opinion that this discussion addresses the material U.S.
tax consequences of an investment in the Securities.
We call to your attention that we are members of the Bar of the State of
New York and do not purport to be experts in, or to render any opinions with
respect to, the laws of jurisdictions other than the State of New York, except
for the federal laws of the United States of America and the Revised Uniform
Limited Partnership Act of the State of Delaware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the Prospectus included as
part of the Registration Statement. In giving such consent, we do not admit
hereby that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended, or the Rules and
Regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ WILLKIE FARR & GALLAGHER
<PAGE> 1
EXHIBIT 23.1
CONSENT OF DELOITTE & TOUCHE LLP
Globalstar Telecommunications Limited:
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-67731 of Globalstar Telecommunications Limited of
our reports on the consolidated financial statements of Globalstar
Telecommunications Limited and Globalstar, L.P. appearing in Amendment No. 1 to
Registration Statement No. 333-57749 of Globalstar, L.P. and Globalstar Capital
Corporation and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
Deloitte & Touche LLP
San Jose, California
December 4, 1998
