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May 28, 2001
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TIME
RUNNING OUT FOR IRIDIUM
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At a hearing March 6, the U.S. Bankruptcy Court in Manhattan
approved an interim financing plan proposed by Iridium, to spend
US$3 million, and set a deadline of March 15 for Iridium to find
new backers or a purchaser to rescue it from bankruptcy. The court
also approved a motion authorizing the sale of the furniture,
fixtures and equipment at Iridium's headquarters in Washington,
valued at about US$200,000. Iridium’s investment bank Donaldson,
Lufkin and Jenrette is contacting 21 firms which have expressed
interest in Iridium to see if any of them would offer bids for the
company. Iridium must also use the interim time to prepare a plan
for de-orbiting the company's network of satellites, and be
prepared to begin implementing the plan on March 17 if a backer is
not found. It will take about six to seven months to execute the
plan, which requires coordination with multiple U.S. government
agencies. To get the full tax write off and any other accounting
benefits the constellation of satellites has to be scrapped.
Motorola, which owns 18 percent of Iridium, wants to make sure all
the satellites are de-orbited. Motorola has agreed to continue to
operate and maintain Iridium's constellation of 88 satellites
until March 17 (the Iridium constellation is licensed for 66
operational satellites, with six on-orbit spares, one per plane -
however, the total number of satellites, counting failed
satellites, launched to support the constellation is 88). Motorola
is sending out notices which say, “Unless a qualified buyer
comes forward and provides additional funding by March 15, we do
not expect Iridium service to be available after 11:59 p.m. EST on
March 17” (0500 UTC, March 18). Judge Blackshear set a hearing
for March 17 for Iridium to present the de-orbiting plan, as well
as budget for the liquidation of other assets, to the court.
Motorola, which was Iridium's largest investor,
has set aside US$2.5 billion to cover its financial exposure to
Iridium, but that figure does not include potential losses from
litigation. Iridium bondholders recently received approval from
the court to sue Motorola for US$3.5 billion.
More
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