Iridium Shares Tumble as Some See Increased Risk of Bankruptcy
quote.bloomberg.com
Washington, June 11 (Bloomberg) -- Shares of Iridium World Communications Ltd., which runs the first global satellite- telephone network, fell 17 percent on concern the cash-strapped company is closing in on bankruptcy because it hasn't sold enough phones.
Iridium shares fell 1 3/16 to 6 after trading as low as 5 13/16, the lowest price since the company first sold stock to the public two years ago. Washington-based Iridium traded at a record 72 3/16 in May 1998.
Iridium doesn't have the money to pay off $800 million it owes banks. Motorola Inc., Iridium's biggest investor, wants to see a revised business plan before adding to the $1.67 billion in financial guarantees it already pledged to the company. Now some bank-loan holders are willing to sell the debt at 30 percent less than face value, a sign that creditors are becoming pessimistic.
If banks are willing to sell at such a discount, ''it is an indicator that bankruptcy is more than within the realm of possibilities,'' William Kidd, an analyst at C.E. Unterberg Towbin, wrote in a research report.
Kidd also lowered his rating on the stock to ''sell'' from ''hold.''
Bidders are willing to pay 60 cents on the dollar for Iridium bank debt, while debtholders are ready to sell at 70 cents, according to bank-loan traders.
Iridium's 14 percent bonds due 2005 are trading at 18 1/2 cents on the dollar, down 4, according to Bloomberg analytics. They traded at 95 1/2 in early January.
Iridium spokeswoman Michelle Lyle dismissed talk of a bankruptcy as ''speculation.'' ''We continue to have discussions with the banks'' about reworking the loans, Lyle said.
Motorola wasn't immediately available to comment. |
