McCaw, India's Chandra Make Bid for ICO Global; Bankruptcy Court Approves
Fri, 03 Dec 1999, 10:31pm EST
By Amy Hellickson
McCaw, India's Chandra Get Approval to Buy ICO Global
(Update2)
(Updates with comment from ASC Enterprises executive in 12th paragraph.)
Wilmington, Delaware, Dec. 3 (Bloomberg) -- Cellular-phone pioneer Craig McCaw and Subhash Chandra, who runs India's most popular television network, won U.S. Bankruptcy Court approval for a joint purchase of satellite-telephone company ICO Global Communications Ltd.
McCaw will be the largest shareholder in ICO, with about 46 percent. Chandra will get 28 percent, and the company's bondholders, existing shareholders and vendors will split 26 percent. ICO filed for bankruptcy protection in August just days after rival Iridium LLC did the same. Iridium's filing made it harder for ICO to raise money.
ICO is one of three satellite-telephone providers and the only one that hasn't started service, unlike Iridium and Globalstar Telecommunications Ltd. The ruling to allow the investment by McCaw and Chandra gives new life to the fledgling satellite-telephone company and the industry as well.
"This gets us ready for lift-off," said ICO Chief Executive Richard Greco.
The financing will give ICO enough money to launch its first satellite at the end of January, Greco said.
Earlier Investment
Last month, ICO won court approval to receive $150 million in short-term financing from McCaw to keep the company afloat. The court today approved a second investment by McCaw and Chandra of $75 million, to be followed by a $275 million infusion by both investors. Chandra runs Zee Telefilms Ltd.
The ruling follows a report Wednesday that McCaw is close to buying Iridium. If successful, McCaw, 50, would gain both Iridium and ICO at a fraction of the cost spent to build the systems, said SoundView Technology Group analyst Tim O'Neil.
McCaw is the largest investor in wireless company Nextel Communications Inc. and the founder of Teledesic LLC, the so- called "Internet-in-the-sky" satellite-data network.
ICO's board approved McCaw's plan in October to lead an investor group that will finance the company to its planned debut in the second quarter of 2001. ICO failed in August to get $600 million from an unidentified investor group.
It also failed to attract subscribers to a rights offering this year. That offering, which was extended twice, was intended to raise $500 million. ICO Global has $1.1 billion in debt.
Chandra, who controls India's Agrani regional satellite service, followed McCaw's bid with his own, which he disclosed in bankruptcy court last month.
Chandra's inclusion in the purchase of ICO will give him a stake in shaping the company as it comes out of bankruptcy protection, said Jai Singh, President and Chief Executive of Mumbai-based ASC Enterprises Ltd., which is developing the Agrani system.
"We're looking to form a new ICO with McCaw and Chandra working shoulder to shoulder to shape that," Singh said.
ICO's shares, now at 3 5/8, haven't traded since the company filed for bankruptcy protection in August. London-based ICO Global went public in July 1998 with 10 million shares sold at $12 each. The stock reached a record 16 5/8 in January.
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