mot.com
A bit old, but gives some background. At 31 Dec, Motorola expected to have $620 million in equity in Iridium by end 1996. If that is 25%, then there is $2.5 bn in equity with loan guarantees of $1.1 bn for $3.6 bn total. Motorola's second generation CDMA satellite system is likely to be the main Globalstar competition, but the Iridium system is the most immediate, so it's worth scrutinizing.
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"The Company further advanced its strategic investment in the IRIDIUMr global communications system. At December 31, 1995, the Company's equity investment in and commitments to make equity investments in Iridium, Inc. was approximately $400 million; additionally, it has committed, subject to action by the Iridium, Inc. Board of Directors, to additional equity investments totaling approximately $60 million. In February 1996, the Company has committed to purchase approximately $160 million of securities to be issued by Iridium, Inc. during 1996.
Iridium, Inc. will require additional funding and, quite possibly, other financial support from various sources in order to complete the global communications system, which is expected to take place over the next three years.
There can be no assurance that Motorola or any other person will provide such funding or financial support. Motorola is the largest investor in Iridium, Inc. and a failure of Iridium Inc. to obtain additional funding or financial support would materially adversely affect Motorola's investment in Iridium, Inc. and in ancillary products. The Company's investment in Iridium, Inc. is included in the Consolidated
Balance Sheet category "Other Assets."
The Company has executed three contracts with Iridium, Inc. for the construction and operation of the global communications system, providing for approximately $6.5 billion in payments by Iridium, Inc. over a ten-year period which began in 1993. The Company has in turn entered into significant subcontracts for portions of the system, for which it will generally remain obligated even if Iridium, Inc. is unable to satisfy the terms of the contracts with the Company, including funding.
Separately, the Company is making significant investments to produce ancillary products for the system, such as subscriber units.
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