WSJ article about Iridium / McCaw / Motorola. (But -- who cares about fundamentals at times like this ? The market is supposed to "know" what is going on. Just go back and look at the price of Qualcomm during all of 1997 and 1998 ...)
February 18, 2000
Motorola and McCaw Shift Tactics
In Bid to Rescue Troubled Iridium
By SCOTT THURM
Staff Reporter of THE WALL STREET JOURNAL
Cellular-phone pioneer Craig McCaw and Motorola Inc. changed tactics in their
bid to rescue the troubled Iridium LLC satellite-phone system, with the hope of
buying Iridium's assets through an auction by mid-April.
Mr. McCaw's Eagle River Investments LLC, of Kirkland, Wash., and
Motorola, of Schaumburg, Ill., said they would provide $5 million in interim
financing to carry Iridium through March 6 and would submit a follow-up
financing plan to U.S. Bankruptcy Court in New York next week. Eagle River
said it would lead a group of investors that would propose to buy Iridium's
assets by mid-April. That will essentially spark an auction for Iridium.
The plan is markedly different from a proposal
Eagle River submitted last week, in which it
offered $75 million in interim financing to carry
Iridium, of Washington, D.C., through mid-June,
while Mr. McCaw decided whether he wanted to
take over the 66-satellite system, which has liabilities of more than $5 billion.
Bob Ratliffe, a spokesman for Eagle River, said Mr. McCaw offered the new
plan as a way to take over Iridium more quickly. Mr. McCaw now believes he
can complete his review of Iridium in 30 to 45 days, Mr. Ratliffe said.
The change in plans comes three days after a group of Iridium's creditors
objected to Mr. McCaw's original proposal, which they said would unfairly
enrich Motorola. They asked the bankruptcy court for permission to sue
Motorola for more than $2 billion in damages. The court has made no ruling on
that request.
Separately, Japan's DDI Corp. said it would sever ties to Iridium and may
liquidate Nippon Iridium Corp. The DDI group, which operates long-distance
and mobile-telecommunications services, has a 50.5% stake in Nippon Iridium,
which in turn holds 11.2% in Iridium LLC. "We are considering liquidating
Nippon Iridium without any additional investment," DDI President Yusai
Okuyama said.
Mr. Okuyama's confirmation that DDI won't sink more money into the venture
signals the de facto withdrawal of DDI from the troubled Iridium venture. At a
news conference, Mr. Okuyama conceded that DDI may have to write off its
entire investment in Iridium.
Mr. Okuyama said the spread of traditional cellular-phone systems means
Iridium has little future. However, DDI will continue to maintain services to
Nippon Iridium's 4,300 Japanese subscribers following the liquidation of that
company.
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