Iridium Ends Purchase of Claircom as Sales Fall Short of Goals
Washington, June 22 (Bloomberg) -- Iridium LLC, which runs the first global-telephone network, said it canceled its planned purchase of Claircom Communications Group Inc. for $65 million, as the cash-strapped company focuses on paying debt.
AT&T Corp. and Rogers Cantel Mobile Communications Inc., which own Claircom, agreed to terminate Iridium's purchase of the No. 2 provider of telephone services for commercial airlines, Iridium said.
In a regulatory filing last month, Iridium said it didn't have enough cash to make a $26.5 million payment required at the closing of the purchase, and that it may not be able to raise the money needed to complete the transaction.
Iridium, based in Washington, D.C., has encountered financial problems in the past four months as it signed up fewer subscribers than expected. The company, 18 percent-owned by Motorola Inc., said it doesn't have money to pay off $800 million owed to banks by the end of this month.
In December, Iridium agreed to buy Seattle-based Claircom for cash and assumed debt to expand into the in-flight telephone business. Claircom owns and operates a digital, air-to-ground telephone network that has 160 ground stations across the U.S., Canada and Mexico.
Rogers Cantel is one of Canada's largest cellular providers. AT&T is the largest U.S. long-distance phone company.
Iridium World Communications Ltd., the publicly traded unit of Iridium LLC, rose 1 9/32 to 10 5/16. New York-based AT&T fell 1/4 to 56 1/4.
Jun/22/1999 18:44
(C) Copyright 1999 Bloomberg L.P. |
