Good buy for long term? I think so, but XM Radio stake is gone..........
By Yuki Noguchi,
Washington Post Staff Writer
Monday, October 15, 2001
Motient Corp. announced today that it raised $55 million in cash mostly by selling off ownerships in some ventures, a move that would enable the company to fund its restructuring and keep its wireless-messaging business.
In another move to ease its cash shortage, the Reston company announced that it paid off about half of its $50 million loan due Friday to Rare Medium Group Inc., a Dallas Web design firm it had planned to merge with until earlier this month.
To repay the loan, Motient transferred 5 million of its shares in XM Satellite Radio Holdings Inc. to Rare Medium, said Walter V. Purnell Jr., president and chief executive of Motient. Motient is in negotiations with Rare Medium to extend the repayment of the remaining amount until Oct. 12, 2002, he said.
In the other deal, Motient was able to raise $45 million of the $55 million in cash because its satellite affiliate, Mobile Satellite Ventures, exercised an option to buy Motient's satellite assets, Purnell said. As part of that deal, Rare Medium is coming in as a new investor to Mobile Satellite and is receiving $50 million in subordinated convertible notes that will effectively give Rare Medium a 23 percent stake in Mobile Satellite, he said.
Motient's ownership in Mobile Satellite, which will be spun off as a separate company, will decrease from 33 percent to 26 percent, he said. Other investors in Mobile Satellite include venture capital firms Columbia Capital LLC, Telcom Ventures LLC and Spectrum Equity Investors, as well as Canada-based satellite company TMI Communications Co.
The remaining $10 million of the cash came from an escrow payment that had been held by Owings Mills-based Aether Systems Inc., which bought Motient's industrial-tracking business last November, Purnell said.
"We live to fight another day," Purnell said. The deal is expected to close in four to five weeks, he said.
Motient, which did not make a $20 million interest payment due on Oct. 1 to its bank creditors, plans to retain Credit Suisse First Boston to negotiate a restructuring of its debt. The negotiations are to begin soon, Purnell said.
Motient, formerly known as American Mobile Satellite, has been trying to remake itself from an industrial shipment-tracking business into a consumer-friendly wireless messaging firm, but it has faltered along the way in large part because of lack of demand for its products.
Earlier this month the company said it would lay off 125 people, or 25 percent of its staff, bringing its workforce to about 350 people. The latest funding deal and the sale of assets would not result in more layoffs, but about 12 people would be transferred to Mobile Satellite, Purnell said.
Shares of Motient closed up 5 cents Friday at 12 cents a share.
More stories in TELECOM online at Washtech.com
Back to Washtech.com Home
© 2001 The Washington Post Company
Techway Events: Techfast Live | Fast 50
Company Postings: Press Releases | Tech Almanac
About Washtech | | Contact Washtech | Privacy
My Profile | Reprints | Subscribe to print edition |
