*ICO May Go To Key Partners And Vendors For New Funds
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ICO - From Communications Daily
by: shaggy_64 (M/USA)
490 of 493
07/27/99 -- ICO is likely to turn to strategic partners and vendors for financing, rather than extend its $500
million rights offering 3rd time, analysts said. ICO twice has had to extend offering that would enable
current institutional shareholders to buy shares at $5 each. Deal, managed by Donaldson, Lufkin &
Jenrette, was to have closed June 4, but was extended to June 24 when company raised only $407 million
of $500 million required to complete offering. When it was clear June 24 deadline would fail to produce
required subscribership, offer was extended to July 27 (today).
Because rights offering still was open Mon., ICO declined to comment on whether it would be able to
close offering today or on what other steps it might take to secure financing. However, there was
consensus among analysts that company's difficulty in closing deal was related to increased caution among
institutional investors following poor performance of Iridium, with which ICO would compete in satellite
telephony.
Rather than extend offering again, ING Barings satellite industry analyst Robert Kaimowitz said he believed
ICO will seek to raise as much as $750 million from its service partners and vendors, which could give
contributors "supervoting rights" on company's board and enable them to steer ICO's strategic direction.
"Any time a company raises money, there is a corresponding transfer of autonomy that cedes to the
backers," another analyst said: "Occasionally, you end up with too many competing interests and
companies losing sight of their original mission." Although it was unclear which parties ICO might approach
for new funds, its key vendors include Deutsche Telekom (satellite access nodes), Ericsson (ground
stations), Hughes (satellite construction), NEC (handsets). Its main investors are Emirates Telecom,
Inmarsat (which owns 9.5% of ICO), Singapore Telecom [Interesting...], TRW, VSNL of India.
Hershel Shosteck, pres. of wireless industry analyst firm Shosteck Assoc., said ICO was likely to succeed
in raising new funds because it and Globalstar have "fewer burdens" than Iridium and as result "look better
in the eyes of Wall Street." However, he said, fundamental question for all operators remains: "Is there
sufficient demand for their services to enable them to stay in business?" Shosteck said answer is: "No. We
can't find a sustainable market there." Continuing build-out of terrestrial mobile networks and Inmarsat's
"already existing installed base" mean mobile satellite business plans don't withstand scrutiny, he said.
[Okay, don't fund ICO and let G* have a crack at it with only the critically wounded IRID...]
Posted: 07/27/1999 12:14 pm EDT as a reply to: Msg 489 by sathood |
