3 posts on IRID news (see below). CNBC just said I* at $7 on Instinet
(http://biz.yahoo.com/bw/990713/il_motorol_1.html 5:17PM EDT):
"Motorola publicly endorsed the new Iridium LLC go-to-market plan which focuses on
vertical and industrial market segments. Motorola also made many thousands of phones
available for sale and received positive reports about the performance of this satellite
technology when used in its intended applications.
For the second quarter, Motorola continued to defer recognition of profits from the
operations and maintenance contract with Iridium LLC, because of Iridium LLC's
current financial condition. In addition, Motorola recorded a special charge of $126
million (in the ''Other Products'' segment) to write down the value of Iridium LLC bonds
that it owns to a level which reflects the decline in the value of Iridium LLC's public
high-yield debt.
Also, given prior commitments, Motorola may be required to fulfill prior contractual
guarantee obligations if Iridium LLC does not meet its obligations under certain of its
bank financing, although Motorola will not provide any further support beyond existing
contractual commitments unless there is substantial participation in the Iridium LLC
restructuring from all parties with a significant financial interest.
In the longer term, the company has several contracts with Iridium LLC, primarily for
the operation and maintenance of its global personal communications system, which may
be impacted depending on the outcome of Iridium LLC's financial restructuring. That
could impact the value of Motorola's investments in assets related to these contracts,
such as inventory, manufacturing equipment and buildings, as well as create other
various potential obligations in connection with these contracts.
The impact on Motorola of an Iridium LLC restructuring may become clearer in the
third quarter, and may necessitate an additional special charge at that time. The
previously announced sales of several businesses and assets are expected to generate
significant gains and significant cash inflows in the third quarter, enabling Motorola to
maintain a strong financial position, even with the negative impact of charges that may
need to be absorbed by Motorola in the financial restructuring of Iridium LLC."
Contact: Motorola, Inc.
George Grimsrud, 847/576-2346
________________________________________
Tuesday July 13, 7:11 pm Eastern Time
Motorola calls on partners to help bail out Iridium
SCHAUMBURG, Ill., July 13 (Reuters) - Motorola Inc. (NYSE:MOT - news) on
Tuesday called on its partners to help bail out Iridium World Communications Ltd.
(Nasdaq:IRID - news), the financially troubled global satellite phone company that
Motorola has bankrolled.
Motorola, the wireless communications and semiconductor maker, owns 18 percent of
Iridium and has guaranteed a portion of that company's debt. Iridium has struggled to
sign up subscribers and has not been able to pay its debts.
In a statement accompanying its second quarter earnings, Motorola said it ''will not
provide any further support beyond existing contractual commitments unless there is
substantial participation in the Iridium LLC restructuring from all parties with significant
financial interest.''
Those parties include Lockheed Martin Corp. (NYSE:LMT - news) and Raytheon Co.
(NYSE:RTNa - news).
Motorola said it continued to defer recognition of profits under its operations and
maintenance contract with Iridium, and recorded a $126 million second-quarter charge
to write down the value of Iridium bonds that it owns. Motorola said it may take
additional charges in the third quarter.
''The impact on Motorola of an Iridium LLC restructuring may become clearer in the
third quarter, and may necessitate an additional special charge at that time,'' Motorola
said.
''The previously announced sales of several businesses and assets are expected to
generate significant gains and significant cash inflows in the third quarter, enabling
Motorola to maintain a strong financial position, even with the negative impact of
charges that may need to be absorbed by Motorola in the financial restructuring of
Iridium LLC,'' Motorola said.
Motorola reported higher-than-expected second quarter operating earnings of $273
million, or 44 cents a share, ahead of last year's $6 million, or one cent a share. Both
figures exclude one-time items.
Shares of Motorola fell $1.50 to $95.00 in after-hours trading on Instinet.
(http://biz.yahoo.com/rf/990713/bko.html)
___________________________________________________
Motorola Says Iridium Support Hinges on Other Contributors
Schaumburg, Illinois, July 13 (Bloomberg) -- Motorola Inc., the biggest investor in
Iridium LLC, said it won't commit any more money to the cash-strapped satellite
communications provider unless other investors and lenders kick in more funds.
Motorola, which has an 18 percent stake in Iridium and has guaranteed at least $1.67
billion, took a $126 million charge in the second quarter to write down the value of
Iridium's bonds. The bonds have fallen about 80 percent this year as the Iridium has
struggled to attract customers.
Schaumburg, Illinois-based Motorola was one on the founders of Iridium in 1987 and
built the 66 satellites that make up the network. Iridium has been unable to attract
enough subscribers to pay its bills, and now the company, investors and lenders are
devising plans to keep it from bankruptcy.
''Motorola will not provide any further support beyond existing contractual commitments
unless there is substantial participation in the Iridium LLC restructuring from all parties
with a significant financial interest,'' Motorola said.
Iridium is 86 percent-owned by 19 strategic investors, which include Lockheed Martin
Corp., Raytheon Co., Sprint Corp., and American International Group Inc.
Iridium shares, which have fallen nearly 80 percent this year, rose 1/4 to 8 3/16.
Motorola fell 2 1/2 to 96 1/2. Motorola announced the charge after the close of U.S.
trading.
Jul/13/1999 19:52
(C) Copyright 1999 Bloomberg L.P. |
