DJ ICO Global -2: May Be Forced To Launch Only 6 Satellites
June 4, 1999
Dow Jones Newswires
ICO Global spokesman Meyers said the company must raise $1.7 billion
in addition to the $300 million it already has to launch its mobile
communications network by the third-quarter of 2000.
The company is in the process of building a $4.7 billion
mobile-communications network with 10 orbiting satellites and two
additional backup satellites in rotation 6,400 miles above earth. However,
if ICO Global can't raise the full funding, the company could launch a
six-satellite constellation, Meyers said.
"Clearly the optimum performance will be at 10 because that gives us
essentially two satellites covering all parts of the world at all times," he said.
The ICO system - a private offshoot of the Inmarsat satellite system set up
under an international treaty - is the foreign rival of the two leading
U.S.-based satellite systems: Iridium World Communications Systems Ltd.
(IRID) and Globalstar Telecommunications Ltd. (GSTRF).
Iridium, whose investors include Motorola Inc., has been trying to
restructure its financing since May, when it said it wouldn't meet
customer-acquisition targets of its bank loans. "And given Iridium's
problems it is tough for investors to accept a third player in a troubled
industry," C.E. Unterberg's Kidd said.
Unfortunately, ICO Global needs money now and the market doesn't want
to spend any because it is being influenced by the lackluster results of
Iridium, said SoundView analyst O'Neil.
Prior to its rights offering, ICO Global examined all alternatives and
decided that giving up about 30% of its stock value to fund its project was
the only way to attract investors in a skittish satellite telephony market,
O'Neil said. "That ($5-a-share offer) was the discount they thought they
had to give to raise the money and at this point that doesn't appear to be
enough," he said.
ICO Global's Meyers said the minimum subscription goal wasn't met
because many of the "strategic shareholders" are international government
agencies that need more time to buy into the rights offering or to increase
the size of their subscriptions. "Some of them move quickly while others
deliberate for a longer period of time," Meyers said.
ICO Global, which is headquartered in London, went public last July,
issuing 10 million ordinary shares as part of a stock and notes offering that
raised a total of $690 million. The stock was priced at $12 a share in the
IPO.
Donaldson, Lufkin & Jenrette Securities, which led ICO Global's initial
public offering last summer, is coordinating the global distribution of the
rights offering.
-Amy Hughes; 201-938-5171
e-mail: amy.hughes@dowjones.com
Briefing Book for: GSTRF | ICOGF | IRID
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