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PROSPECTUS SUPPLEMENT
TO PROSPECTUS DATED AUGUST 18, 1999
$105,000,000
[GLOBALSTAR LOGO]
GLOBALSTAR TELECOMMUNICATIONS LIMITED
COMMON STOCK
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This is a public offering of up to $105,000,000 of shares of our common stock.
We may offer and sell these shares from time to time in separate tranches
pursuant to a common stock purchase agreement with Bear Stearns. The price Bear
Stearns will pay us for these shares will be based on one of three formulas,
which we will choose upon each decision to take down a tranche. We may choose to
receive:
- 97 1/2% of the arithmetic average of the closing bid prices,
- 93% of the arithmetic average of the volume weighted average price, or
- 100% of the lowest sale price (excluding sales not meeting certain
criteria)
of our common stock, as reported by the Nasdaq National Market over the two
trading days following our notice, subject to certain exceptions described
herein. See "Prospectus Supplement--Plan of Distribution" beginning on page S-16
for more information. Bear Stearns will sell the shares on the Nasdaq National
Market at prices available in the market or directly to purchasers at negotiated
prices.
Each time we propose to sell a tranche of shares to Bear Stearns hereunder, we
will supplement this prospectus to show:
- the date of notice of take down of such tranche;
- the number of shares proposed to be sold;
- the amount of gross proceeds received by us from any prior sales
hereunder as of the date of such supplement (excluding any proceeds from
the proposed sale and before deducting the offering expenses, including
the fee to be paid to Bear Stearns);
- the remaining dollar amount of shares under this prospectus supplement
after consummation of the proposed sale (assuming that these shares were
sold to Bear Stearns based upon the last reported sale price of the
common stock listed below); and
- the last reported price of the common stock as of a recent date.
Our common stock is traded on the Nasdaq National Market under the symbol
"GSTRF," and the last reported sale price of the common stock on September 15,
2000, was $11.50 per share.
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SEE "RISK FACTORS" BEGINNING ON PAGE S-5 TO READ ABOUT CERTAIN RISKS THAT YOU
SHOULD CONSIDER BEFORE BUYING SHARES OF OUR COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY HAS
APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY
OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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BEAR, STEARNS & CO. INC.
The date of this prospectus supplement is September 18, 2000
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PROSPECTUS SUPPLEMENT SUMMARY
You should read the entire prospectus supplement, our base prospectus dated
August 18, 1999, our and Globalstar's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2000 included herewith and the other documents
incorporated by reference before making an investment decision. The information
in this prospectus supplement replaces any inconsistent information in the base
prospectus and in our and Globalstar's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2000 included herewith. Globalstar Telecommunications
Limited is referred to in this prospectus supplement as "we", "our", "us" or
"GTL" and Globalstar, L.P. is referred to as "Globalstar."
GLOBALSTAR TELECOMMUNICATIONS LIMITED
OUR COMPANY
We are a general partner of Globalstar, which has recently commenced
operations of its global telecommunications network. As of June 30, 2000, we
owned approximately 39% of Globalstar's ordinary partnership interests and,
after giving effect to the purchase of Globalstar's ordinary partnership
interests with the proceeds from this offering, we will own approximately 41% of
Globalstar's ordinary partnership interests (based upon an assumed average sale
price to Bear Stearns of $11.00 per share of our common stock). We operate as a
holding company to permit public equity ownership interest in Globalstar. Our
sole asset consists of our partnership interests in Globalstar.
Loral Space & Communications Ltd., one of the world's leading satellite
companies, is one of the founders of, and, through a subsidiary, serves as the
managing general partner of, Globalstar.
GLOBALSTAR
Globalstar owns and operates a satellite constellation that forms the
backbone of a global telecommunications network designed to serve virtually
every populated area of the world. Globalstar's network, which we refer to as
the Globalstar system, uses Qualcomm's patented CDMA technology to provide
high-quality mobile and fixed telephone service to customers who live, work or
travel beyond the reach of terrestrial-based communications networks. Qualcomm
has agreed that Globalstar will be the only provider of mobile satellite
services to which it will license its patented CDMA technology.
Globalstar's service provider partners, who are experienced
telecommunications companies, have launched, are launching or are preparing to
launch, service in key markets worldwide. Globalstar and its service provider
partners have also begun intensive marketing campaigns and are adopting
multifaceted, locally oriented marketing strategies to serve their markets.
Under Globalstar's agreements with its service providers, these partners are the
exclusive providers of Globalstar service within their assigned territory and
will retain their exclusivity as long as they meet minimum performance goals.
Under these agreements, Globalstar acts as a wholesaler of capacity on its space
segment to its service providers. Globalstar has assigned the largest service
territories to its founding strategic partners, including a France Telecom
Alcatel joint venture, Vodafone AirTouch, ChinaSat, Elsacom and Dacom.
The Globalstar system commenced commercial service in the first quarter of
2000 when Globalstar began its transition from a development stage entity to an
operating limited partnership. As of August 31, 2000, there were 20 gateways in
revenue service, and three additional gateways have completed their system
testing process, two of which are expected to be in revenue service during the
third quarter of 2000. In addition, several existing gateways have been or are
being upgraded to expand their coverage areas, bringing service to new
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territories and markets. These include large parts of Alaska, the northern
Atlantic sea lanes between North America and northern Europe, most of the
Caribbean and the Sea of Japan.
Globalstar service providers are now providing commercial service in 40
countries, including Argentina, Australia, Brazil, Canada, China, Mexico, South
Korea, the United States and virtually all of western Europe. By the end of the
fourth quarter 2000, Globalstar service providers plan to have commercial
service available in approximately 60 additional countries, including Russia,
Saudi Arabia, Scandinavia and Turkey.
The Globalstar system is designed to offer a cost-effective communications
solution for areas underserved or unserved by existing telecommunications
infrastructures. Globalstar mobile phones are simple to use -- just like
ordinary cellular telephones -- and are among the smallest, lightest and least
expensive satellite phones currently available. These phones are multimode,
functioning as cellular phones where terrestrial cellular service is available
and as satellite phones where cellular service is not available. Globalstar
phones provide this multimode capability without separate modules or plug-ins.
Globalstar pay phones and fixed wireless phones for business and residential use
provide basic telephone service in rural villages and at remote industrial and
residential sites.
Globalstar phones have familiar features such as phone book, voicemail,
short messaging service, and, in some service areas, call forwarding. Commercial
data service is expected to be available in North America later this year, and
in Europe, Australia and other GSM territories in 2001. As of August 31, 2000,
Globalstar's vendors Qualcomm, Ericsson and Telit had manufactured,
collectively, approximately 120,000 Globalstar phones.
Globalstar's utilization of Qualcomm's CDMA technology should enable it to
swiftly adopt future improvements as this industry-leading wireless technology
evolves. In addition, because the intelligence of the Globalstar system is
located on the ground, future enhancements are easily implemented.
As an example of this design flexibility, Globalstar recently concluded
preliminary agreements with In-Flight Network, a joint venture between News
Corporation and Rockwell Collins, to provide Internet and e-mail services to
passengers in commercial and other aircraft. Under those agreements, Globalstar,
In-Flight Network and Qualcomm will participate jointly in the development of a
system that will provide broadband Internet access as well as e-mail and
voice-over-IP applications directly to aircraft. In 2001, Globalstar expects to
provide an independent two-way channel for Internet access, e-mail, downloading
of data and other applications, supplemented by a very high bandwidth forward
link over a geostationary satellite, capable of providing high volume content
such as streaming video.
Globalstar's full constellation of 52 satellites, including four in-orbit
spares, is in orbit and functioning. Based on our experience to date, we expect
Globalstar satellites to have a useful life of 10 years, rather than our
original expectation of 7 1/2 years. The Globalstar satellites use a simple,
traditional "bent pipe" design, amplifying and reflecting received signals
directly back to earth, with no intersatellite links. Gateways owned and
operated by Globalstar service providers then connect customer calls through the
existing public telephone network. As a result, the Globalstar system will
complement and extend, rather than bypass, the existing telephone network
infrastructure. Globalstar believes its call quality is equal to, or better
than, digital cellular connections.
According to industry sources, more than 80% of the world's land mass is
not covered by cellular service. Globastar believes, based on market research,
that its addressable market -- those who live, work or regularly travel to areas
underserved or unserved by existing telecommunications infrastructure and who
desire and have the ability to pay for telephone service such as that offered by
Globalstar -- is approximately 40 million potential customers. We expect that
Globalstar's first generation system will have a system capacity of
approximately 7 million subscribers, less than one fifth of Globalstar's
potential addressable market. In fact, because of the limited spectrum available
for use by mobile satellite services
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like Globalstar, the combined capacity of Globalstar and the other existing and
announced mobile satellite service systems are capable of serving only a portion
of this market.
Globalstar's original consortium of 12 leading international
telecommunications service providers and manufacturers has grown into an
international organization with marketing channels in 125 countries and
agreements with over 220 local service providers. Globalstar-supported
cooperative advertising is creating brand awareness globally and within selected
market segments, while sales channels are focused both on the mass market as
well as targeted market segments, including:
- government, including police, emergency and military users;
- commercial freight and fishing vessels, cruise ships and recreational
boats;
- truck drivers and business travelers;
- the forestry, mining, oil and gas and other natural resource industries;
- wilderness guides and outdoor enthusiasts;
- agribusiness;
- commercial and private aircraft; and
- utilities.
Globalstar's service providers have an existing customer base of more than
100 million cellular customers from which they intend to identify for direct
marketing efforts those who work in, or frequently travel to, or through, areas
without cellular service.
From July 1, 2000 through December 31, 2000, Globalstar expects to spend
approximately $161 million for the enhancement of its system software, for the
eight spare satellites being constructed by Space Systems/Loral, for development
work completed but not paid at June 30, 2000, for repayment of vendor financing
and for the net financing provided to Globalstar's service providers to assist
in the purchase of gateways, fixed access terminals and handsets (net of
expected receipts of $129 million from the service providers as repayment of
such financing). In addition, cash interest, preferred dividends and operating
costs are estimated to be between $100 million and $125 million per quarter for
the remainder of 2000.
Globalstar expects that its cash on hand ($463 million at June 30, 2000),
the drawdown of all its remaining available credit (approximately $29 million at
June 30, 2000), and, assuming this offering is completed this year, the expected
proceeds from this offering, will enable it to end 2000 with a cash balance of
approximately $150 million. Globalstar will require significant additional funds
to cover its cash outflows for 2001, which it expects will include operating
expenses, interest on indebtedness and dividends on preferred stock of as much
as $500 million, as well as capital expenditures and other cash requirements.
The amount of such additional funds will depend, among other things, upon the
amount and timing of revenues generated. We cannot assure you of the amount of
revenues that will be generated or of the accuracy of the amounts estimated
above.
Globalstar is contemplating raising additional funds through, among other
alternatives, equity infusions from its strategic partners; there is no
assurance that it will be able to do so on satisfactory terms or at all. If
Globalstar is not able to raise sufficient funds, the lack of funds may result
in a default on its debt facilities. If Globalstar cannot obtain waivers or
otherwise cure such default, there could be a severe adverse effect on the value
of our shareholders' equity. See "Risk Factors" beginning on page S-5 herein and
"Liquidity and Capital Resources" in our and Globalstar's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2000 attached hereto.
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Globalstar's $500 million credit agreement contains a financial condition
covenant which comes into effect on March 31, 2001, and requires, among other
things, that Globalstar have revenues of $100 million for the four quarters
ending March 31, 2001. Globalstar's revenues for the first of these four
quarters, the quarter ended June 30, 2000, were $708,000. Given the level of
revenues in the quarter ended June 30, 2000, Globalstar anticipates that the
growth in revenues during the subsequent three quarters will not be sufficient
to meet the $100 million revenue covenant. If Globalstar cannot satisfy this
covenant or obtain waivers or amendments from a majority of the bank lenders or
fulfill the $500 million obligation in a form satisfactory to all the bank
lenders, Globalstar would be in default under its debt facilities (including
vendor financing) and Globalstar's lenders and bondholders would have the right
to accelerate payment of their loans to Globalstar. If Globalstar is not able to
obtain waivers or refinance such debt, there could be a severe adverse effect on
the value of our shareholders' equity. Loral SatCom Ltd. and Loral Satellite,
Inc., directly and indirectly wholly owned subsidiaries of Loral Space &
Communications, Ltd., have jointly and severally guaranteed Globalstar's
obligations under this credit agreement. See "Risk Factors" beginning on page
S-5 herein and "Liquidity and Capital Resources" in our and Globalstar's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2000 attached
hereto.
THE OFFERING
We may offer up to $105,000,000 of shares of our common stock under this
prospectus supplement pursuant to our common stock purchase agreement with Bear
Stearns. Under this purchase agreement, upon satisfaction of certain conditions,
we may exercise our right to sell a tranche of common stock to Bear Stearns by
giving notice to Bear Stearns by 5:30 p.m. on any trading day. However, we may
not issue notices on consecutive trading days or after September 17, 2001. Each
sale of our common stock to Bear Stearns will typically take place on the third
trading day after we give notice. See "Plan of Distribution" herein for a more
detailed description of certain terms of this offering.
Assuming that we sell to Bear Stearns all of the shares of our common stock
that are permitted to be sold under the purchase agreement and that the average
sale price to Bear Stearns is $11.00 per share, the number of shares of our
common stock that would be outstanding after this offering would be 106,457,195.
The number of shares outstanding after this offering is based on the common
stock outstanding on June 30, 2000 and does not include shares of our common
stock issuable upon exercise of options and warrants and upon conversion of our
convertible preferred stock.
We will use the net proceeds from this offering to purchase ordinary
partnership interests in Globalstar.
We may offer shares under this prospectus supplement on a continuous basis
under Rule 415 of the Securities Act.
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RISK FACTORS
You should carefully consider the following risks before you decide to buy
our common stock. An investment in our common stock also entails additional
risks which are described in our and Globalstar's Annual Report on Form 10-K for
the year ended December 31, 1999 and are incorporated by reference in this
prospectus, in the base prospectus and in our and Globalstar's Quarterly Report
on Form 10-Q for the quarter ended June 30, 2000 included herewith, to the
extent they have not been updated by the information provided to you in this
section.
THE GLOBALSTAR SYSTEM ONLY RECENTLY COMMENCED OPERATIONS, AND CUSTOMER DEMAND
FOR THE SERVICE HAS EMERGED MORE SLOWLY THAN WE ORIGINALLY ANTICIPATED,
RESULTING IN LOWER THAN ANTICIPATED REVENUES. FAILURE TO OBTAIN SUFFICIENT
REVENUES COULD RESULT IN DEFAULT UNDER GLOBALSTAR'S DEBT FACILITIES.
Telephone systems using low-earth orbit satellites are a new business that
has not yet succeeded in the marketplace. Globalstar commenced commercial
operations in the first quarter of 2000 and has yet to generate significant
subscriber revenues, despite being in service in parts of the world for more
than six months. For the six month period ended June 30, 2000, Globalstar had
approximately $1.3 million of revenues. Globalstar's market penetration rates,
minutes of use and resulting revenues have been significantly less than its
management's original expectations. Roll-out of commercial service in countries
has also been slower than expected. Globalstar believes that it is too early in
the service roll-out to discern any trend or pattern in minutes of use and
resulting revenues that would be indicative of future results. There can be no
assurance that Globalstar will be able to rapidly and significantly improve its
market penetration rates and revenues from current levels to a level sufficient
to fund Globalstar's future cash requirements, including cash requirements to
service its debt. If Globalstar is unable to obtain sufficient funds to pay for
its debt service, Globalstar would be in default under its debt facilities and
there could be a severe adverse effect on the value of our shareholders' equity.
See "Liquidity and Capital Resources" in our and Globalstar's Quarterly Report
on Form 10-Q for the quarter ended June 30, 2000 attached hereto.
The first company to launch service in this industry, Iridium L.L.C., filed
for bankruptcy in August 1999. Iridium terminated commercial service in March
2000, although it is currently providing service to its customers at no charge.
GLOBALSTAR MUST ACHIEVE SIGNIFICANT REVENUES QUICKLY IN ORDER TO MEET A
FINANCIAL COVENANT THAT WILL COME INTO EFFECT IN MARCH 2001.
Globalstar's $500 million credit agreement contains various financial
condition covenants, one of which comes into effect on March 31, 2001. This
covenant would require, among other things, that Globalstar have revenues of
$100 million for the four quarters ending March 31, 2001. Globalstar's revenues
for the first of these four quarters, the quarter ended June 30, 2000, were
$708,000. Given the level of revenues in the quarter ended June 30, 2000,
Globalstar anticipates that the growth in revenues during the subsequent three
quarters will not be sufficient to meet the $100 million revenue covenant.
If Globalstar cannot satisfy this covenant, obtain waivers or amendments
from a majority of the bank lenders, or fulfill the $500 million obligation in a
form satisfactory to all the bank lenders, Globalstar would be in default under
its debt facilities (including vendor financing) and Globalstar's lenders and
bondholders would have the right to accelerate payment of their loans to
Globalstar. If Globalstar is not able to obtain waivers or refinance such debt,
there could be a severe adverse effect on the value of our shareholders' equity.
Loral SatCom Ltd. and Loral Satellite, Inc., directly and indirectly wholly
owned subsidiaries of Loral Space &
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Communications Ltd., have jointly and severally guaranteed Globalstar's
obligations under this credit agreement.
GLOBALSTAR WILL INCUR ADDITIONAL SYSTEM COSTS AND WILL REQUIRE SIGNIFICANT
ADDITIONAL FUNDS.
From July 1, 2000, through December 31, 2000, Globalstar expects to spend
approximately $161 million for the enhancement of its system software, for the
eight spare satellites being constructed by Space Systems/Loral, for development
work completed but not paid at June 30, 2000, for repayment of vendor financing
and for the financing provided to Globalstar's service providers to assist in
the purchase of gateways, fixed access terminals and handsets (net of expected
receipts of $129 million from the service providers as repayment of such
financing). In addition, cash interest, preferred dividends and operating costs
are estimated to be between $100 million and $125 million per quarter for the
remainder of 2000.
Globalstar expects that its cash on hand ($463 million at June 30, 2000),
the drawdown of all its remaining available credit (approximately $29 million at
June 29, 2000), and, assuming this offering is completed this year, the expected
proceeds from this offering, will enable it to end 2000 with a cash balance of
approximately $150 million. Globalstar will require significant additional funds
to cover its cash outflows for 2001, which it expects will include operating
expenses, interest on indebtedness and dividends on preferred stock of as much
as $500 million, as well as capital expenditures and other cash requirements.
The amount of such additional funds will depend, among other things, upon the
amount and timing of revenues generated. We cannot assure you of the amount of
revenues that will be generated or of the accuracy of the amounts estimated
above.
Globalstar is contemplating raising additional funds through, among other
alternatives, equity infusions from its strategic partners; there is no
assurance that it will be able to do so on satisfactory terms or at all. If
Globalstar is not able to raise sufficient funds, the lack of funds may result
in a default on its debt facilities. If Globalstar cannot obtain waivers or
otherwise cure such default, there could be a severe adverse effect on the value
of our shareholders' equity.
Globalstar also has secured from SS/L twelve and eighteen month options to
purchase two additional Delta launch vehicles. The total future commitment for
these launch vehicles is approximately $82 million plus escalation of 3% per
year. If these launch vehicles are not used by the end of 2003, Globalstar will
incur a termination charge of approximately $19 million.
LOCKHEED MARTIN IS DISPUTING GLOBALSTAR'S RIGHT TO ISSUE IT A $150 MILLION
SUBORDINATED NOTE IN SATISFACTION OF PAYMENTS MADE UNDER A GUARANTY.
On June 30, 2000, Globalstar's $250 million credit facility with The Chase
Manhattan Bank, which was fully drawn, matured, and was thereupon repaid in full
by its guarantors, including Lockheed Martin Corporation. Pursuant to the
relevant agreements entered into in 1996, Globalstar issued to all the
guarantors three-year notes in proportion to the principal amount of the credit
facility guarantees.
Lockheed Martin, however, has rejected the notes it received and is instead
asking Globalstar to issue new securities with additional rights and enhanced
value, without waiving its claim that it is entitled to receive an immediate
cash reimbursement by Globalstar of its $150 million payment to the bank
lenders. Globalstar disputes Lockheed Martin's interpretation of the relevant
agreements, but is, nonetheless, in discussions with Lockheed Martin to resolve
the dispute.
If the dispute is not resolved, we cannot be sure that if the matter were
litigated the court would agree with Globalstar's interpretation of the
agreements. Moreover, if as a result of this dispute, a holder of Globalstar
public bonds claimed a cross default under the applicable
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indentures, and a court ruled against Globalstar, the maturity date of the bonds
would be accelerated. Management believes, however, that a court would agree
with Globalstar's interpretation of the relevant agreements.
GLOBALSTAR FACES INTENSE COMPETITION FROM BOTH DIRECT AND INDIRECT COMPETITORS,
AND ADDITIONAL DIRECT COMPETITORS PLAN TO ENTER THE MARKET SOON.
ICO Global Communications has proposed a similar worldwide system and has
filed a request with the Federal Communications Commission to operate in the
United States in a different frequency band than that used by Globalstar. ICO
Global has emerged from its bankruptcy proceedings with reduced debt
obligations, pursuant to a financing package from a group led by Craig McCaw,
which makes it more likely that ICO Global will complete its system and compete
with Globalstar in the future.
If Constellation Communications, Inc. and Mobile Communications Holdings,
Inc., which have held licenses from the Federal Communications Commission since
July 1997, attract financing, build their systems and begin operations, they
will become direct competitors as well. If Iridium receives additional financing
and resumes commercial service, it will also become a direct competitor.
In addition to competing for investment capital, subscribers and service
providers in markets all over the world, the mobile satellite services systems,
including Globalstar, also compete with each other for the limited spectrum
available for mobile satellite services operations. CDMA systems such as
Globalstar, Constellation and Mobile Communications Holdings permit multiple
systems to operate within the same frequency band. To the extent that Globalstar
is required to share this frequency band with these other systems or with
foreign systems, Globalstar's available capacity will be reduced.
Existing fixed satellite systems, including those of American Mobile
Satellite Corporation, Comsat Corporation's Planet-1, PT Asia Cellular
Satellites and Inmarsat, and proposed systems, such as Thuraya Satellite
Telecommunications Company, also provide, or intend to provide, competing
service on a regional basis at potentially lower costs.
Technological advances and a continuing trend toward strategic alliances in
the telecommunications industry could give rise to significant new competitors.
Satellite-based telecommunications systems are characterized by high
up-front costs and relatively low operating costs. Several systems are being
proposed, and, while the proponents of these systems believe that there will be
significant demand for their services, actual demand will not become known until
such systems are operational. If the capacity of Globalstar and competing
systems exceeds demand, price competition could be intense.
NEW TECHNOLOGIES AND THE EXPANSION OF LAND-BASED SYSTEMS MAY REDUCE DEMAND FOR
GLOBALSTAR'S SERVICE.
The extension of land-based telecommunications services to regions
currently underserved or not served by wireline or cellular services may reduce
demand for Globalstar service in those regions. These land-based
telecommunications services are being built more quickly than Globalstar
originally anticipated, which has contributed to lessened demand for
Globalstar's service.
Globalstar may also face competition in the future from companies using new
technologies and new satellite systems. The space and communications industries
are subject to rapid advances and innovations in technology. New technology
could render Globalstar obsolete or less competitive by satisfying consumer
demand in more attractive ways or through the introduction of incompatible
standards. In addition, Globalstar depends on technologies
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developed by third parties, and we cannot be certain that these technologies
will continue to be available to Globalstar on a timely basis or on reasonable
terms.
THE RIGHT OF SHAREHOLDERS UNDER BERMUDA LAW ARE DIFFERENT FROM THE RIGHTS OF
SHAREHOLDERS UNDER U.S. LAW.
Since we are a Bermuda company, the principles of law that govern
shareholder rights, the validity of corporate procedures and other matters are
different from those that would apply if we were a U.S. company. For example, it
is not certain whether a Bermuda court would enforce liabilities against us or
our officers and directors based upon United States securities law either in an
original action in Bermuda or under a United States judgment. Bermuda law giving
shareholders rights to sue directors is less developed than in the United States
and may provide fewer rights.
PRICES OF OUR COMMON STOCK MAY BE VOLATILE.
Many things that we cannot predict or control may affect the price of our
common stock. Risks associated with the operation of satellite systems, in
particular, may cause sudden changes in the price.
In addition, the stock markets in general, and the Nasdaq National Market
and technology companies in particular, have experienced extreme price and
volume fluctuations that have often been unrelated or disproportionate to the
operating performance of these companies. These broad market and industry
factors may seriously impact the market price of our common stock, regardless of
our actual operating performance.
HOLDERS OR OUR COMMON STOCK MAY BE DILUTED BY FUTURE STOCK ISSUANCES.
As of June 30, 2000, 96,911,740 shares of our common stock were
outstanding. In addition:
- Globalstar partners have the right, exercisable over a period of years
following the beginning of Globalstar service and two consecutive
quarters of positive net income, to exchange their outstanding ordinary
partnership interests for approximately 154 million shares of our common
stock.
- holders of outstanding warrants issued in connection with Globalstar's
11 3/8% senior notes have the right to exercise them for 3,810,469 shares
of our common stock at an exercise price of $17.394 per share;
- in connection with their guarantee of Globalstar's $500 million credit
facility, Loral has warrants to purchase an aggregate of 3,450,000
Globalstar partnership interests (equivalent to approximately 13,800,000
shares of our common stock) at an exercise price of $91.00 per
partnership interest (equivalent to $22.75 per share of our common
stock);
- in connection with its provision of approximately $531 million of vendor
financing to Globalstar, Qualcomm has warrants to purchase an aggregate
of 3,450,000 Globalstar partnership interests (equivalent to
approximately 13,800,000 shares of our common stock) at an exercise price
of $42.25 per partnership interest (equivalent to $10.56 per share of
common stock);
- Globalstar employees and directors have options to buy 8,415,800 shares
of our common stock, at exercise prices ranging from $4.16 to $31.41 per
share;
- under our stock option plan, we may in the future grant employees'
options to purchase as many as 1,487,300 shares of our common stock;
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- in connection with service provider arrangements in China under which
China Telecommunications Broadcast Satellite Corporation has agreed to
act as the sole distributor of Globalstar service in China, China Telecom
has an option to acquire 937,500 Globalstar partnership interests
(equivalent to 3,750,000 shares of our common stock) for $18,750,000; and
- 4,396,295 shares of our Series A preferred stock are outstanding and are
convertible into 9,451,837 shares of our common stock and 2,999,990
shares of our Series B preferred stock are outstanding and are
convertible into 5,778,791 shares of our common stock.
Moreover, we are currently in discussion to sell additional shares of our
common stock to certain of Globalstar's partners. Sales of significant amounts
of our common stock to the public, or the perception that those sales could
happen, could adversely affect the price of our common stock.
FORWARD-LOOKING STATEMENTS
Some statements and information contained or incorporated by reference in
this prospectus supplement and the base prospectus are not historical facts, but
are "forward-looking statements", as this term is defined in the Private
Securities Litigation Reform Act of 1995. We wish to caution you that these
forward looking statements are only predictions, and actual events or results
may differ materially as a result of risks that we face, including those set
forth in this prospectus supplement and the base prospectus under "Risk Factors"
or incorporated therein by reference. When we or Globalstar use the words
"believe", "intend", "expect", "may", "will", "should", "anticipate" or their
negatives, or similar expressions, the statements which include those words are
usually forward-looking statement. When we describe strategy that involves risks
or uncertainties, we are making forward-looking statements.
USE OF PROCEEDS
We will use the net proceeds from this offering to purchase ordinary
partnership interests in Globalstar. Globalstar, in turn, will use these
proceeds for general corporate purposes, including capital expenditures,
operations (including marketing and distribution of phones and services) and
interest expense.
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PRICE RANGE OF COMMON STOCK
Our common stock is quoted on the Nasdaq National Market under the symbol
"GSTRF." The following table lists, for the periods indicated, the range of high
and low sales prices for our common stock as reported on the Nasdaq National
Market. The sale prices for the common stock have been adjusted to reflect the
two-for-one stock split we issued on June 8, 1998, to shareholders of record as
of May 29, 1998 and the two-for-one stock split we issued on May 28, 1997 to
shareholders of record as of May 12, 1997.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1997
First Quarter............................................. $ 17 13/16 $12 1/2
Second Quarter............................................ $ 16 3/4 $11 7/8
Third Quarter............................................. $ 26 3/4 $13 1/2
Fourth Quarter............................................ $ 29 3/4 $19 1/2
1998
First Quarter............................................. $ 37 1/8 $19
Second Quarter............................................ $ 36 1/8 $25 3/4
Third Quarter............................................. $ 28 1/8 $ 9 5/8
Fourth Quarter............................................ $ 22 1/8 $ 8 5/16
1999
First Quarter............................................. $ 24 1/2 $12 5/8
Second Quarter............................................ $ 24 1/2 $13 1/2
Third Quarter............................................. $ 33 $20 1/2
Fourth Quarter............................................ $ 49 1/2 $19
2000
First Quarter............................................. $ 53 3/4 $12 13/16
Second Quarter............................................ $ 15 3/4 $ 5 13/16
Third Quarter (through September 15, 2000)................ $ 12 1/4 $ 7 1/8
</TABLE>
S-10
<PAGE> 12
CAPITALIZATION
The following table sets forth the cash and cash equivalents and
capitalization of GTL and Globalstar as of June 30, 2000 on an unaudited
historical basis.
GLOBALSTAR TELECOMMUNICATIONS LIMITED
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, 2000
-------------
<S> <C>
Shareholders' equity:
Preference shares, $.01 par value, 20,000,000 shares
authorized:
8% Series A convertible redeemable preferred stock
(4,396,295 shares outstanding, $220 million redemption
value)................................................. $ 213,393
9% Series B convertible redeemable preferred stock
(2,999,990 shares outstanding, $150 million redemption
value)................................................. 145,574
Common stock, $1.00 par value, 600,000,000 shares
authorized (96,911,740 shares outstanding).............. 96,912
Paid-in-capital........................................... 1,001,132
Warrants.................................................. 11,268
Accumulated deficit....................................... (370,684)
----------
Total shareholders' equity and capitalization...... $1,097,595
==========
</TABLE>
GLOBALSTAR, L.P.
(IN THOUSANDS, EXCEPT PARTNERSHIP INTEREST DATA)
<TABLE>
<CAPTION>
JUNE 30, 2000
-------------
<S> <C>
Cash and cash equivalents(1)................................ $ 463,486
==========
Vendor financing liability, including current portion(2).... $ 758,824
Revolving credit facility................................... 100,000
Term loans payable, including current portion............... 400,000
Notes payable(3)............................................ 206,300
Notes payable to affiliates(3).............................. 43,700
Senior notes ($1,450,000 aggregate principal amount)........ 1,403,388
Partners' capital:
8% Series A convertible redeemable preferred partnership
interests (4,396,295 interests outstanding, $220
million redemption value).............................. 213,393
9% Series B convertible redeemable preferred partnership
interests (2,999,990 interests outstanding, $150
million redemption value).............................. 145,574
Ordinary partnership interests (61,861,714 interests
outstanding)........................................... 336,410
Unearned compensation(4)................................ (1,773)
Warrants(5)............................................. 215,388
----------
Total partners' capital............................ 908,992
----------
Total capitalization............................... $3,821,204
==========
</TABLE>
-------------------------
(1) Includes restricted cash of $49 million, consisting of payments received
from service providers for the purchase of gateways.
(2) See Note 6 of Globalstar's consolidated financial statements for the year
ended December 31, 1999 incorporated by reference and Note 5 of Globalstar's
condensed consolidated financial statements for the period ended June 30,
2000, included herewith.
(3) See Note 6 of Globalstar's condensed consolidated financial statements for
the period ended June 30, 2000, included herewith.
(4) See Note 11 of Globalstar's consolidated financial statements for the year
ended December 31, 1999, incorporated by reference.
(5) See Notes 6, 7 and 9 of Globalstar's consolidated financial statements for
the year ended December 31, 1999 incorporated by reference and Note 5 of
Globalstar's condensed consolidated financial statements for the period
ended June 30, 2000, included herewith.
S-11
<PAGE> 13
TAXATION
This summary of certain tax considerations is based upon current (as of the
date of this prospectus) laws, treaties, cases, regulations and rulings, all of
which are subject to change, possibly with retroactive effect. It does not
consider all the tax issues that might be relevant to an investor or that depend
upon an investor's particular circumstances.
Prospective investors should consult their own professional advisors about
the tax consequences of acquiring, holding and disposing of the common stock
under the laws of the jurisdictions in which they are subject to taxation.
The legal conclusions set forth below in the discussion of U.S. tax law are
the opinions of Willkie Farr & Gallagher, our U.S. counsel. The summary of
certain Bermuda tax consequences is the opinion of Appleby, Spurling & Kempe,
our Bermuda counsel.
UNITED STATES TAX CONSIDERATIONS
Taxation of United States Holders. This section discusses certain rules
applicable to a holder of stock that is a United States Holder. For purposes of
this discussion, a "United States Holder" means a holder of stock who or which
is
- an individual who is a citizen or resident of the United States for U.S.
federal income tax purposes,
- a corporation or other entity taxable as a corporation created or
organized under the laws of the United States or any political
subdivision thereof (including the States and the District of Columbia),
- an estate or trust described in Section 7701(a)(30) of the Internal
Revenue Code of 1986, as amended (the "Code"), or
- a person whose worldwide income or gain is otherwise subject to U.S.
federal income taxation on a net income basis.
Certain U.S. federal income tax consequences relevant to a holder of stock
other than a United States Holder (a "non-U.S. Holder") are discussed separately
below.
A dividend payment on the stock will be taxable as ordinary dividend income
to the extent it is paid out of our current or accumulated earnings and profits.
Payments in excess of earnings and profits will be treated as a tax-free return
of capital to the extent of the United States Holder's tax basis in the stock.
These payments will reduce the tax basis at which the stock is held; payments in
excess of tax basis will be treated in the same manner as gains arising from a
sale or other disposition of the stock, as discussed below.
Because we are a foreign corporation, the dividend payments will not be
eligible for the inter-corporate dividends-received deduction. Holders should
consult their U.S. tax advisors regarding the U.S. foreign tax credit treatment
of dividends received from us.
Subject to the discussion below on passive foreign investment companies
("PFICs") and assuming the United States Holder holds the stock as a capital
asset, any gain or loss recognized by a United States Holder on the sale or
other disposition (other than a redemption by us) of stock will be capital gain
or loss. Such capital gain or loss will be long-term or short-term depending on
the holding period for the stock. A United States Holder will also generally
recognize capital gain or loss upon a redemption of stock for cash, provided
that certain requirements are met.
Special rules apply to the taxation of a U.S. shareholder in a PFIC. A PFIC
is a foreign corporation (1) 75% or more of whose income is passive or (2) 50%
or more of whose assets produce or are held to produce passive income. We
believe that we have not been a PFIC and
S-12
<PAGE> 14
will not become one. We continue to earn, through Globalstar, sufficient active
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 we were a PFIC, unless a United States Holder of our stock made the QEF
election described below, he would be subject to a tax-deferral charge on gain
on a disposition of such stock and on certain "excess distributions" received
from us. In addition, any such gains or excess distributions would be taxable at
ordinary income rates.
If a United States Holder makes the qualified electing fund ("QEF")
election, he will be required to include in his taxable income his pro rata
share of our ordinary earnings and net capital gain for each taxable year
(regardless of when or whether cash attributable to such income is actually
distributed to such shareholder by us). 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 shareholder. A United States
Holder's tax basis in its shares of stock will be increased by the amount so
included and decreased by the amount of nontaxable distributions. A United
States Holder making a QEF election may also elect to defer the payment of tax
on certain undistributed income of the PFIC (subject to an interest charge)
until such time as the income is distributed or the holder sells the stock.
The QEF election is effective only if we make certain required information
available to the United States Holders. In the event we are characterized as a
PFIC for federal income tax purposes, we will undertake to provide each United
States Holder with the information needed to make a QEF election and to
determine the pro rata share of our ordinary earnings and net capital gain
applicable to our stock.
A U.S. shareholder that holds "marketable" stock in a PFIC may, in lieu of
making a QEF election, avoid certain unfavorable consequences of the PFIC rules
by electing to mark the PFIC stock to market as of the close of each taxable
year. If a United States Holder has stock which is marketable, then such United
States Holder may be eligible to be taxed on a mark-to-market basis with regard
to such stock. If such United States Holder so elected, he would be taxed on
changes in market value of the stock from year to year, whether or not he
actually sold such stock. A United States Holder that makes the mark-to-market
election will be required to include in income each year as ordinary income an
amount equal to the excess, if any, of the fair market value of the stock at the
close of the year over the United States Holder's adjusted tax basis in such
stock. If, at the close of the year, the United States Holder's adjusted tax
basis exceeds the fair market value of the stock, then the United States Holder
may deduct any such excess from ordinary income, but only to the extent of net
mark-to-market gains previously included in income. Any gain from the actual
sale of the PFIC stock will be treated as ordinary income, and any loss will be
treated as ordinary loss to the extent of net mark-to-market gains previously
included in income. We expect our stock to constitute "marketable" stock for
these purposes. However, we cannot assure you that our stock will continue to
constitute "marketable" stock in the future.
Taxation of Non-U.S. Holders. We expect that most of our income will be
from sources outside the United States and will not be effectively connected
with a U.S. trade or business. Thus, non-U.S. Holders will not be subject to
U.S. federal taxation on distributions received from us unless those
distributions are effectively connected with the conduct by the non-U.S. Holder
of a trade or business in the United States. In addition, a non-U.S. Holder will
not be subject to U.S. federal income taxation on gains realized on a sale or
exchange of stock unless (1) the gain from the sale is effectively connected
with a trade or business of the non-U.S. Holder in the United States (unless an
applicable treaty provides otherwise) or (2) the non-U.S. Holder is an
individual and is present in the United States for 183 or more days in
S-13
<PAGE> 15
the taxable year of the disposition and certain other conditions are met. The
determination of whether a non-U.S. Holder is engaged in the conduct of a trade
or business in the United States or whether the sale of a non-U.S. Holder's
stock is effectively connected with a trade or business of the non-U.S. Holder
in the United States depends on the facts and circumstances of each investor's
case. Non-U.S. Holders that are foreign corporations may be subject to an
additional branch profits tax on their income which is effectively connected
with a U.S. trade or business. Each prospective non-U.S. Holder should consult
with his own tax advisor to determine whether his distributions or gains will be
subject to U.S. federal income taxation.
Information Reporting and Backup Withholding. Under certain circumstances
relating to the manner in which certain non-U.S. Holders hold their stock,
dividend payments with respect to our stock and proceeds from the sale, exchange
or redemption of our stock may be subject to information reporting to the IRS
and possible U.S. backup withholding at a 31% rate. Backup withholding will not
apply, however, to a holder who furnishes a correct taxpayer identification
number or provides under penalties of perjury a certificate of foreign status
and makes any other required certification or who is otherwise exempt from
backup withholding. Both U.S. Holders and non-U.S. Holders should consult their
tax advisors regarding the application of the information reporting and backup
withholding rules to holders in their circumstances.
Amounts withheld as backup withholding may be credited against a holder's
U.S. federal income tax liability, and a holder may obtain a refund of any
excess amounts withheld under the backup withholding rules by filing the
appropriate claim for refund with the IRS and furnishing any required
information.
Taxation of GTL. Our tax consequences result from our status as a partner
in Globalstar. As a partnership, Globalstar itself will not have any U.S.
federal income tax liability. Generally, its partners will be taxed as if they
directly expended their share of Globalstar expenditures and directly realized
their share of Globalstar income. We expect, based on Globalstar's description
of its proposed activities, that most of our 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 the United States. Thus, we believe
that there generally will be no U.S. federal income taxes on our share of such
income. The United States Treasury Department is engaged in a project to draft
and propose regulations that will determine how the partners will be taxed in
the United States on their respective shares of Globalstar's income. The outcome
of the regulation project cannot be predicted. The Treasury Department may adopt
final regulations that characterize substantial portions of our income as
derived from U.S. sources and as effectively connected with a U.S. trade or
business.
We will be subject to U.S. tax at regular U.S. federal, state and local
corporate rates on our share of Globalstar's income that 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 us to prepare our federal, state and local income tax
returns. Globalstar intends to make cash distributions, to the extent of
available funds, to all partners, including us, until the non-U.S. partners,
again including us, 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. The distribution to non-U.S. partners for federal income taxes may
take the form of a withholding tax payment made by Globalstar to the U.S.
Treasury. The amount withheld may exceed the amount of our federal income tax
liability, in which case we would be entitled to seek a refund from the U.S.
Treasury for the excess amount. In addition to the regular U.S. taxes, we will
be subject to a United States branch profits tax (currently at a 30% rate) on
actual or deemed withdrawals of our share of Globalstar's U.S. Income.
S-14
<PAGE> 16
BERMUDA TAX CONSIDERATIONS
At the date of this prospectus, there is no Bermuda income tax, corporation
or profits tax, withholding tax, capital gains tax, capital transfer tax, estate
or stamp duty or inheritance tax payable by us or the Holders of our stock
(other than Holders ordinarily resident in Bermuda) in respect of their
investment in the stock.
We have obtained from the Minister of Finance under the Exempted
Undertakings Tax Protection Act 1966, as amended, a certificate confirming that,
in the event of there being enacted in Bermuda, any legislation imposing 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 us or to any of our
operations, or our other obligations except insofar as such tax applies to
persons ordinarily resident in Bermuda and holding such stock or other
obligations, or to any land we lease or let in Bermuda.
We are liable to pay the Bermuda government an annual registration fee
calculated on a sliding scale based upon our assessable capital which fee will
not exceed BD$26,500.
We have been classified as non-resident of the Bermuda exchange control
area by the Bermuda Monetary Authority, whose permission for the issue of the
stock has been obtained. The transfer of stock between persons regarded as
non-resident of Bermuda for exchange control purposes and the issue and
redemption of stock to and by such persons may be effective without specific
consents under the Exchange Control Act 1972 of Bermuda and Regulations made
thereunder. Transfers involving any person regarded as resident in Bermuda for
exchange control purposes may require specific authorization under that Act. We,
by virtue of being a non-resident of Bermuda for exchange control purposes, are
free to acquire, hold and sell any foreign currency, securities and other
investments without restrictions.
Purchasers of stock may be required to pay stamp taxes and other charges in
accordance with the laws and practices of the country of purchase. Prospective
purchasers should consult their tax advisers as to the tax laws of applicable
jurisdictions and the specific tax consequences of acquiring, holding and
disposing of the stock.
The stock does not provide for additional payments by us following a change
in the tax laws or rules of Bermuda that is adverse to the Holders of our stock.
TAX CONSIDERATIONS IN OTHER JURISDICTIONS
Any portion of our income from sources outside the United States, realized
through Globalstar or otherwise, may be subject to taxation by foreign countries
and the extent to which these countries may require us or Globalstar to pay tax
or to make payments in lieu of tax cannot be determined in advance. However,
based upon our review of current tax laws, including applicable international
tax treaties of certain countries that Globalstar believes to be among its
significant potential markets, we expect that a significant portion of our
worldwide income will not be subject to tax by the United States, Bermuda or by
the countries from which we derive our income. To the extent that Globalstar
bears a higher foreign tax because any holder of ordinary partnership interests
(including us) 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 by Globalstar to such partner
with respect to its ordinary partnership interests.
S-15
<PAGE> 17
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in a purchase agreement dated
September 18, 2000, between us and Bear Stearns, Bear Stearns has agreed, upon
notice from us, to purchase up to $105,000,000 of common stock, valued based on
the applicable valuation formula described below, in a series of tranches.
However, we may not issue notices on consecutive trading days or after September
17, 2001.
Upon satisfaction of certain stock price, timing and other conditions, we
can exercise our right under the purchase agreement to take down a tranche of
common stock by giving notice to Bear Stearns by 5:30 p.m. on any trading day.
In each tranche, we can sell Bear Stearns a number of shares of common stock not
to exceed the lesser of (x) 10% of the total trading volume reported by the
Nasdaq National Market on the two trading days prior to our giving notice, (y)
10% of the total number of shares of common stock outstanding as of the date of
this prospectus supplement and (z) 10% of the total number of shares of common
stock outstanding on a trading day we give notice, but not less than 50,000
shares of common stock (except during the last tranche in which we can only take
down an amount of shares that would not cause Bear Stearns to purchase more than
$105,000,000 of common stock, but which can be less than 50,000 shares).
The price Bear Stearns will pay to us will be based on one of three
formulas, which we will choose upon each decision to take down a tranche. We may
choose to receive:
- 97 1/2% of the arithmetic average of the closing bid prices,
- 93% of the arithmetic average of the volume weighted average price, or
- 100% of the lowest sale price (excluding sales not meeting certain
criteria)
of our common stock, as reported by the Nasdaq National Market over the two
trading days following our giving notice. We will deliver the shares of common
stock to Bear Stearns, and Bear Stearns will pay for the shares on the third
trading day after we give notice. However, if we do not meet certain trading
volume and float requirements, the two-day pricing period and the date of
payment and delivery of the shares may be extended by one or five trading days.
Bear Stearns will sell the shares on the Nasdaq National Market at prices
available in the market or directly to purchasers at negotiated prices.
As noted above, Bear Stearns' obligation is limited to $105,000,000 of
common stock, as determined by the sale price to Bear Stearns.
Bear Stearns Compensation. We have agreed to pay Bear Stearns a fee of
$5,000,000 for entering into the purchase agreement.
Indemnification of Bear Stearns. In the purchase agreement, we have agreed
to indemnify Bear Stearns against certain liabilities, including liabilities
under the Securities Act, or to contribute to payments Bear Stearns may be
required to make in connection with these liabilities.
Discretionary Accounts. Bear Stearns has informed us that it does not
intend to confirm sales to any account over which they exercise discretionary
authority.
Taxes. Purchasers of the shares of common stock offered by this prospectus
may be required to pay stamps taxes and other charges in accordance with the
laws and practices of the country of purchase in addition to the offering price.
Lock-up Agreement. Except for the common stock to be sold in this offering
and any shares offered in connection with employee benefit plans, shares sold to
Globalstar's partners and other limited exceptions, we have agreed not to offer,
sell, contract to sell or otherwise, or announce any intention to, issue any
shares of our common stock or other capital stock or
S-16
<PAGE> 18
securities convertible into or exchangeable for, or any rights to acquire, our
common stock or our other capital stock, during each period commencing on the
date we deliver a notice of sale and ending on the last pricing date of such
sale, without the prior written consent of Bear Stearns.
Bear Stearns has from time to time provided certain investment banking
services to us and our affiliates, including Globalstar, for which they have
received customary fees.
LEGAL MATTERS
Certain United States tax matters described under "Taxation" will be passed
upon for us by Willkie Farr & Gallagher, New York, New York. The validity of the
common stock will be passed upon for us by Appleby, Spurling & Kempe, Hamilton,
Bermuda. Cravath, Swaine & Moore, New York, New York, represented Bear Stearns
in connection with this offering. As of August 31, 1999, partners and counsel in
Willkie Farr & Gallagher beneficially owned approximately 144,452 shares of
common stock. Mr. Robert B. Hodes is counsel to the law firm of Willkie Farr &
Gallagher and serves as a director on our board of directors and the board of
directors of Loral and as a member of the executive and audit committees of our
board of directors and the board of directors of Loral.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC which
you can read at the SEC's Web site at http://www.sec.gov. You can also read
these documents at the SEC's public reference rooms in Washington, D.C.,
Chicago, Illinois and New York, N.Y. Please call the SEC toll free at
1-800-SEC-0330 for information about its public reference rooms.
We have filed a registration statement with the SEC on Form S-3 under the
Securities Act of 1933. This prospectus does not contain all of the information
in the registration statement. We have omitted certain parts of the registration
statement, as permitted by the rules and regulations of the SEC. You may inspect
and copy the registration statement, including exhibits, at the SEC's web site
and public reference facilities. Our statements in this prospectus about the
contents of any contract or other document are not necessarily complete. You
should refer to the copy of the contract or other document we have filed as an
exhibit to the registration statement for complete information.
The SEC allows us to "incorporate by reference" the information we file
with it, which means we can satisfy our legal obligations to disclose important
information contained in those documents by referring you to them. The
information included in the following documents is incorporated by reference and
is considered to be a part of this prospectus. More recent information that we
file with the SEC automatically updates and supersedes any inconsistent
information contained in prior filings.
The documents listed below have been filed under the Securities and
Exchange Act of 1934 with the SEC and are incorporated herein by reference:
- GTL's and Globalstar's Annual Report on Form 10-K for the year ended
December 31, 1999;
- GTL's and Globalstar's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2000;
- GTL's and Globalstar's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 2000;
- GTL's Proxy Statement relating to the 2000 Annual Meeting of
Shareholders;
S-17
<PAGE> 19
- GTL's and Globalstar's Current Report on Form 8-K, filed July 7, 2000;
- 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
We also incorporate by reference all documents subsequently filed by us
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, until the
offering of the securities under this prospectus is completed.
We will provide without charge to each person, including any person having
a control relationship with that person, to whom a prospectus is delivered, a
copy of any or all of the information that has been incorporated by reference in
this prospectus but not delivered with this prospectus. If you would like to
obtain this information from us, please direct your request, either in writing
or by telephone to Globalstar Telecommunications Limited, Cedar House, 41 Cedar
Avenue, Hamilton HM12, Bermuda, Attn: Secretary, (441) 295-2244. For information
about Globalstar, please direct your request in writing or by telephone to
Globalstar, L.P. at 3200 Zanker Road, P.O. Box 640670, San Jose California
95134-0670, Attention Dan McEntee, (408) 933-4000.
You should rely on the information incorporated by reference or provided in
this prospectus or any prospectus supplement. We have not authorized anyone else
to provide you with different information. We are not making an offer of these
securities in any state where the offer is not permitted. You should not assume
that the information in this prospectus or any prospectus supplement is accurate
as of any date other than the date on the front of those documents.
S-18
<PAGE> 20
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT
OR ADDITIONAL INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT
SEEKING AN OFFER TO BUY SHARES OF OUR COMMON STOCK IN ANY JURISDICTION WHERE THE
OFFER OR SALE IS NOT PERMITTED. THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IS CORRECT ONLY AS OF THE DATE OF THIS PROSPECTUS,
REGARDLESS OF THE TIME OF THE DELIVERY OF THIS PROSPECTUS OR ANY SALE OF OUR
COMMON STOCK.
---------------------------
TABLE OF CONTENTS
---------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Supplement Summary............. S-1
The Offering.............................. S-4
Risk Factors.............................. S-5
Forward-Looking Statements................ S-9
Use of Proceeds........................... S-9
Price Range of Common Stock............... S-10
Capitalization............................ S-11
Taxation.................................. S-12
Plan of Distribution...................... S-16
Legal Matters............................. S-17
Where you can find more information....... S-17
Base Prospectus
Quarterly Report on Form 10-Q for the
Quarter Ended June 30, 2000
</TABLE>
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$105,000,000
[GLOBALSTAR LOGO]
GLOBALSTAR
TELECOMMUNICATIONS
LIMITED
COMMON STOCK
------------------------------------------
PROSPECTUS SUPPLEMENT
------------------------------------------
BEAR, STEARNS & CO. INC.
SEPTEMBER 18, 2000
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