Orbcomm
Struggles With New Layoffs, Misses Debt Payment
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Orbcomm Global LP
is struggling, having slow subscriber growth and announcing
additional layoffs. Orbcomm expects to miss an August 15 scheduled
US$12 million payment on US$170 million in senior notes it sold to
help finance its operations. The company has arranged US$17 million
in interim debt financing from its majority owner,  Teleglobe
Inc. The financing should give Orbcomm enough cash to function until
the end of the third quarter or the beginning of the fourth. Orbcomm
plans to reorganize its debt, but is not contemplating bankruptcy
protection at this time. Orbcomm is looking for additional equity
partners and considering several financial alternatives, including
the sale of some of its assets or a restructuring. Orbcomm would
like a third equity partner to join Teleglobe and Orbital Sciences
Corp.
Orbcomm also
announced that it planned to cut an additional 100 jobs, about 25
percent of its work force, following a similar reduction made in
late June. The layoffs cut Orbcomm's work force down to about 300.
Orbcomm is changing
its business plan to now focus on top level customers and distribute
its services through resellers, scrapping its direct sales plans.
Orbcomm has begun to implement new operational and financial plans
to reduce its capital requirements over the next several years.
David W. Thompson, Orbital's Chairman and Chief Executive Officer,
said, “A great deal of work still remains to be done by Orbcomm
over the coming months, including completing a significant private
equity financing, addressing its public debt, and maintaining the
confidence of its customers and business partners.”
Orbcomm increased
its total subscriber units in service or on order to about 242,000
units at the end of June from 239,000 units at the end of March. Its
installed subscriber base expanded by about 20% to approximately
31,000 units in service at the end of the second quarter.
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