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February 17, 2000
Iridium Gets $5M Financing To Operate Co. Thru March 6
WASHINGTON -- Iridium LLC obtained $5 million in interim financing through March 6 from Motorola Inc. (MOT) and Eagle River Inc., an investment company headed by Craig McCaw.
In a press release Thursday, the satellite telephone company said it now expects an investor group led by Eagle River to make a bid in the near term to acquire Iridium's assets under Section 363 of the Bankruptcy Code.
As reported, a $20 million interim financing package led by Motorola was to expire Feb. 15. Eagle River agreed to provide $74.6 million in interim financing through mid-year while it performed due dilligence prior to a possible bid.
Iridium now expects to close the sale by mid-April
Iridium expects the investor group will submit a bid similar to the terms contained in the debtor-in-possession documents filed last week with the court.
As reported, Motorola Corp. (MOT) with an 18% stake in Iridium, said last week that it would retain an equity stake in the newly formed company.
Iridium will file a motion in U.S. Bankruptcy Court by early March to establish procedures for the sale and to secure additional financing through April.
The procedure would allow other bids to be made for the assets, as required by Section 363.
Iridium said the latest financing will expedite the transition of its assets and workers to a new operating company.
As reported, Iridium filed for Chapter 11 bankruptcy protection Aug. 13 and its shares were delisted from the Nasdaq Stock exchange in November.
-John Seward; Dow Jones Newswires; 201-938-5400
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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.
Iridium Set to Get $75 Million From Investors Led by McCaw (Feb. 10)
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.
Write to Scott Thurm at scott.thurm@wsj.com
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