McCaw shuffles his satellites
seattletimes.nwsource.com
Thursday, May 18, 2000, 12:00 a.m. Pacific
McCaw shuffles his satellites
by Roger Yu
Seattle Times technology reporter
In a complex, widely anticipated deal, Bellevue-based Teledesic intends to merge with struggling ICO Global Communications to form a holding company overseeing high-speed Internet services beamed from satellites.
The deal is likely to result in two networks of satellite-based wireless services emerging from telecommunications pioneer Craig McCaw's empire - one for fixed locations and the other for mobile users.
The announcement comes a day after London-based ICO Global, to be renamed New ICO, emerged from Chapter 11 bankruptcy protection. ICO, which had hoped to launch 10 to 12 medium-orbit satellites, had gone into bankruptcy court in August.
McCaw, who also controls Teledesic, led a group of investors to pump in about $1.2 billion to help revive ICO.
In anticipation of integrating ICO with Teledesic, McCaw earlier this month rolled over his satellite assets into the holding company, called ICO-Teledesic Global (ITG). The formation of ITG has been approved by its board but subject to shareholder and regulatory approval.
New ICO and Teledesic would become independent subsidiaries of ITG, which is likely to be based in Kirkland. The proposal is subject to approval by the New ICO board, shareholders and regulatory agencies. But approval is likely a foregone conclusion because ITG already owns controlling shares of Teledesic and New ICO.
Based on the restructuring plans, holders of the existing common shares of old ICO will receive about 1 percent of the New ICO common shares.
The end result will be a corporate reshuffling mostly legal in nature, with Teledesic's operation still controlled from its Bellevue headquarters and New ICO in London.
McCaw still will remain the top boss of all operations. He will be ITG's chairman as well as chairman of New ICO and Teledesic.
The companies also said ICO Chief Executive Richard Grego is stepping down, replaced by McCaw aide Russell Daggatt, who was given the title of acting CEO of New ICO and ITG. A Teledesic spokesman wouldn't say if a permanent CEO search for both positions will be conducted.
With speculation about their future rampant, the companies' announcement left many questions unanswered. Their executives were not available for comment.
One scenario had the companies reducing the number of satellites they planned to deploy, with launch scheduled for as early as 2002. A source close to the company acknowledged that Teledesic's envisioned fleet of satellites, currently at 288, is likely to be reduced.
David Bowermaster, a company spokesman, said a recent report that ICO will add eight satellites beyond the current 12 was inaccurate, but he acknowledged that New ICO plans to raise about $2.1 billion for operations.
He declined to provide further details on New ICO's plans but added that the satellite integration strategy was in the works.
Some analysts said the strategy could involve reducing the Teledesic satellite count and increasing the number of ICO satellites.
Teledesic satellites, which are set in low orbit, would beam voice and data services in high bandwidth to fixed locations. In a separate network, New ICO, whose satellites fly higher, aims to serve mobile users.
Speculation that ICO could order more satellites has shifted attention to Hughes Space & Communications, a division of Hughes Electronics that ICO contracted for satellite manufacturing. Hughes Space & Communications is being acquired by Boeing, which has had past contract run-ins with Teledesic.
Hughes' potential windfall is "still premature" to discuss, said George Torres, a Hughes spokesman.
Meanwhile, Teledesic engineers have been working with ICO to upgrade transmission speed, possibly to meet a newly emerging wireless protocol. The collaborative work, which includes Hughes and other vendors, has been in place since McCaw announced his plans to invest in ICO in November, the company said.
Roger Yu's phone message number is 206-464-3119. |
