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World Comm. Ltd.)
Nightly Business
by: goldteck
20284 of 20288
07/14/99: Huge Debts Threaten To Eliminate Iridium
PAUL KANGAS: Shares of Iridium (IRID) sank 13 percent today after its number one corporate backer,
Motorola (MOT), said that the company may go bankrupt or have to liquidate. Iridium the struggling satellite
network, is having trouble paying its debts. Creditors have given the company extensions to turn its business
around, but as Stephanie Woods reports, time is running out. STEPHANIE WOODS, NIGHTLY
BUSINESS REPORT CORRESPONDENT: Motorola isn't pulling the plug on Iridium yet, but it will no
longer support the struggling satellite network unless other stakeholders agree to help restructure Iridium's
debt. Iridium has a $90 million interest payment due tomorrow. BRETT LAMBERT, ANALYST, DFI
INTERNATIONAL: Motorola really sent us a shot across the bow today with this announcement, and it
was directed toward the other partners in Iridium, "pony up, it's your turn to help out Iridium." WOODS:
Lockheed Martin (LMT) says it only owns shares in the company and it has very low expectations for its
performance. TRW (TRW) and Raytheon (RTN) could not be reached for comment. Iridium has had
troubling signing up subscribers to its network, in part because the phones need direct line-of-sight to the
satellite. They don't work inside buildings and calls may be blocked by trees or tall buildings. The company
has cut prices and targeted new customers but so far without much success.
SCOTT CLELAND, ANALYST, LEGG MASON PRECURSOR GROUP: The high end is being
satisfied by a lot of terrestrial wireless solutions. And you have to have a pretty compelling argument of why
somebody needs one phone when they can use other phones in different parts of the world. WOODS:
Analysts say it is unlikely an outside buyer will emerge.
LAMBERT: It would be difficult to find a "white knight" at this time because of the huge debt burden,
because of the technical problems they are still experiencing and because of the very low subscriber rates.
WOODS: Iridium says it has a 30 day grace period on tomorrow's $90 million interest payment. In the
meantime, the company says it will continue to work on its restructuring. Stephanie Woods, NIGHTLY
BUSINESS REPORT, Washington.
Posted: 07/15/1999 11:27 pm EDT as a reply to: Msg 20283 by uri3000 |
