OrbComm
Files For Bankruptcy Protection
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OrbComm Global LP
and seven of its subsidiaries have filed for Chapter 11 bankruptcy
in federal court in Delaware, while expecting the satellite network
to remain in full operation. OrbComm has implemented a new business
plan that involves reduced operating and capital expenditures and a
simplified distribution strategy. OrbComm’s sales and marketing
strategy has been revised to focus on its top-tier customers in a
number of key industries. The plan shifts distribution through
value-added resellers and other partners, rather than through the
company's direct and indirect sales channels.
OrbComm missed an
interest payment on a US$170 million loan on August 15, one of the
main reasons it filed for bankruptcy protection. The filing came
exactly 30 days after the first missed payment, signaling that the
company's financial woes are continuing.
OrbComm has
retained Donaldson, Lufkin and Jenrette Securities Corp. to advise
the company on various recapitalization alternatives and assist in
discussions with its bondholders. The company has been in
discussions with an informal bondholders committee, representing
more than 60 percent of the outstanding principal amount of
OrbComm's senior notes. OrbComm expects to continue discussions with
representatives of the bondholders while the company is in Chapter
11.
 OrbComm's
partners and owners, Teleglobe and Orbital Sciences, have indicated
that they are prepared to convert their outstanding debt into equity
in OrbComm in connection with the completion of new equity
investment. Teleglobe Inc., holds 68 percent of the company, and
Orbital Sciences Corporation, owns the remaining 32 percent.
Teleglobe’s investment in OrbComm is about US$165 million.
Teleglobe has agreed to extend to OrbComm a total of US$17 million
in interim debt financing as previously announced, US$8 million of
which has already been provided through a secured loan. Teleglobe,
based in Canada, is being  acquired
by  Bell
Canada Enterprises (BCE). BCE officials have made it clear that they
wanted to shed Teleglobe. The balance of this financing will provide
the company with short-term liquidity for the next few months and
should be provided as debtor-in-possession financing. Orbital
Sciences Corp has retained Bear, Stearns and Co. Inc. to explore
financing alternatives for OrbComm.
OrbComm
operates a 33-satellite constellation. The company still has at
least 16 satellites at different steps of integration by Orbital
Sciences, but all plans to actually launch them are currently on
hold.
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