Motorola to Sell 20 Percent of Propel Wireless Unit
--From AOl. OT - Not sure if you get any Iridium too!-- Cooters
Washington, June 27 (Bloomberg) -- Motorola Inc. will divest its holdings in companies that provide wireless service overseas, many of which have been competing with Motorola customers.
Motorola, based in Schaumburg, Illinois, packaged the wireless stakes into a single company called Propel Inc., which filed today for a $500 million initial public offering. Propel will sell as much as 20 percent of its stock through the IPO with Motorola distributing the remaining shares later.
Motorola, the world's No. 2 mobile-phone maker, originally invested in these foreign service providers -- through its network management group -- to help develop markets for Motorola mobile phones and other wireless equipment. However, this has created a conflict because other customers for Motorola equipment have found themselves competing with the Propel companies, according to a registration statement filed with the Securities and Exchange Commission.
``Motorola has advised us that this is a significant factor in its decision to separate this portion of its network management group business through Propel,'' the company said in the registration statement.
Within 12 months of the IPO's completion, Motorola plans to take one of two actions: either distribute the remaining Propel shares to Motorola shareholders; or offer Motorola shareholders the option of exchanging their Motorola stock for Propel shares.
Propel holds ownership stakes in companies that are based in countries such as Mexico, Brazil, Israel, and Pakistan. At the end of last year, these operating companies had wireless licenses to provide service in areas that housed more than 357 million people, including 146 million in Pakistan.
Subscribers Rising
The number of subscribers at these companies rose to 7.6 million as of March 31 from 6.8 million on Dec. 31, 1999. Propel's stake in the revenue from these companies totaled $1.2 billion last year, up from $1.06 billion in 1998.
The new company doesn't include Motorola's stakes in specialized mobile radio operators in countries such as Israel, India, and Japan. Nor does it include Motorola's 15 percent stake in Nextel Communications Inc., a provider of specialized mobile radio service.
Propel said it will use the IPO proceeds to fund continuing operations, for acquisitions, and to expand its portfolio of assets. Some of the money will also be devoted to repaying the company's borrowings from Motorola, which totaled $490 million when adjusted to account for a recent acquisition.
Underwriters for the stock sale will include Goldman, Sachs & Co. and Morgan Stanley Dean Witter. Propel will seek to have its shares trade on the Nasdaq Stock Market under the symbol PRPL.
Jun/27/2000 17:40 ET |
