ICO Global files for Chapter 11 bankruptcy
By Jessica Hall
NEW YORK, Aug 27 (Reuters) - ICO Global Communications Ltd., which is building a global, satellite communications network, filed for bankruptcy on Friday, becoming the latest casualty in the nascent satellite phone industry.
ICO filed for Chapter 11 protection from its creditors in the U.S. Bankruptcy Court in Delaware, according to court documents. ICO's (Nasdaq:ICOGF - news) move follows by two weeks the bankruptcy filing of rival Iridium World Communications Ltd.'s (Nasdaq:IRID - news).
ICO aims to provide global phone service through a network of 12 satellites to be sent into orbit by the end of next year. Its rivals include Iridium, which is backed by Motorola Inc.(NYSE:MOT - news) and others, and Globalstar, an international group led by Loral Space & Communications (NYSE:LOR - news).
The satellite phone companies aim to use networks of satellites orbiting hundreds of miles overhead to provide wireless phone service, anytime and anywhere. But the market for the costly services, which require customers to carry cumbersome handsets, is uncertain, analysts said.
Trading in ICO's stock was halted Friday on Nasdaq after the market requested additional information. Its shares were trading at $3.625, down 62.5 cents, before being halted.
In a statement, ICO Chief Executive Richard Greco said, ''Our Chapter 11 filing should provide ICO with the extra time needed to reorganize, recapitalize and complete our financing. We believe that our actions will be successful and that ICO will emerge as a very effective competitor in providing global mobile satellite telephone services.''
ICO two weeks ago said it failed to secure $600 million in financing commitments and it was seeking revised financing options. ICO's fund-raising efforts have been hampered, in part, by Iridium's woes, analysts said.
ICO previously said it would need more than $1 billion to launch its satellite phone system by the fourth quarter of 2000. Those funds would add to the $3.1 billion the company has already received from investors.
ICO also ran into resistance from bondholders over its efforts from raise funds through strategic investors, analysts said.
U.S. Bankruptcy Judge Mary Walrath scheduled a hearing at 5 p.m. Eastern (2100 GMT) on Friday to consider motions to allow ICO to carry on with normal business operations during the bankruptcy proceedings.
Hughes Electronics Corp., which owns a 4 percent stake in ICO, said it was aware that London-based ICO filed for bankruptcy, but it declined further comment.
Hughes, an ICO investor and its prime contractor, previously said it potentially would face exposure of about $500 million, before taxes, if ICO was liquidated.
Shares of Hughes gained $1.19 to $52.6258 on the New York Stock Exchange on Friday. Investors viewed the ICO bankruptcy filing as a sign that Hughes would not be pressured to bail out ICO on its own, analysts said.
In the bankruptcy filing, ICO Global Communications Services Inc. listed $41 million in assets and $18.3 million in liabilities. Its Bermuda-based affiliate, ICO Global Communications (Holdings) Ltd., listed $2.57 billion in assets and $1.18 billion in liabilities.
ICO's Cayman Islands-based affiliate, ICO Global Communications (Operations) Ltd., resolved ''to commence a winding-up proceeding ... in which the appointment of provisional liquidators will be sought.'' The Cayman affiliates petition lists $2.33 billion assets and $2.32 billion in liabilities.
ICO Global Communications Holdings B.V., based in the Netherlands, listed $707 million in assets and $694 in liabilities. It was not immediately clear if the assets and liabilities of the various ICO affiliates commingled.
ICO's largest unsecured creditors include Bank of New York Co. Inc. (NYSE:BK - news), Japan's NEC Corp. , Hughes and KPN Telecom BV of the Netherlands, according to the filing.
Rival Iridium filed bankruptcy on Aug. 13 after suffering from debt woes, slower-than-expected subscriber growth, marketing and distribution missteps and technical problems with its telephone handsets. Iridium plans to continue operating during its bankruptcy proceeding
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