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LORAL COMPLETES PURCHASE OF GLOBALSTAR SHARES

NEW YORK-Loral Space & Communications Ltd., New York, announced July 6 it had closed on its purchase of 4.2 million partnership interests in Globalstar L.P. from founding service provider partners DACOM, Daimler-Benz Aerospace, Hyundai, TESAM and Vodafone Group plc.

Early next year, Globalstar plans to offer satellite-based, wireless telephony and data communications worldwide.

Loral bought the Globalstar partnership interests, equal to 16.8 million shares of Globalstar Telecommunications Ltd., at a price of $100 each, corresponding to $25 per share of Globalstar stock.

Half the total sale proceeds, or $210 million, were deposited into an escrow account for the founding service provider partners to spend for purchase of Globalstar gateways and user terminals.

Vodafone, the largest cellular carrier in the United Kingdom, reduced its stake in Globalstar to 3.14 percent from 5.15 percent as a result of the July 6 Loral purchase of its partnership interests for $117 million. Vodafone said it would deposit half of the money it raised in an interest-bearing joint account with Globalstar for five years.

Late last month, Loral raised net proceeds of about $524 million through an add-on stock offering of 20 million shares at $27 each that Lehman Brothers Inc., New York, lead managed. Besides using this new equity capital to buy the Globalstar partnership interests, Loral said it plans to “invest in its existing core business, to pursue emerging satellite service opportunities and for possible acquisitions.”

Loral, established in 1996, is involved in the design, manufacture and operation of geosynchronous and low-earth-orbit satellite systems.

As a result of its purchase of Globalstar partnership interests, Loral increased its ownership stake to 42 percent from 38 percent in Globalstar. Loral then turned around and, in a related transaction, sold a 4 percent indirect interest in Globalstar L.P. to three Soros funds, which purchased from it a total of 8.4 million shares of Globalstar stock at $29.17 each.

The shares that the Soros funds bought are restricted and may not be sold privately, Loral said. However, Globalstar has agreed to provide a shelf-registration with the Securities and Exchange Commission for these shares. The SEC registration is to become effective by July 6, 1999 so that the Soros-held stock could be offered publicly after that date.

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