news.com. Iridium stock sinks on continued woes
By Corey Grice
Staff Writer, CNET News.com
May 14, 1999, 1:00 p.m. PT
update Iridium stock tumbled today after the struggling global satellite telephone
service provider hired Donaldson Lufkin & Jenrette as a financial adviser to help
the company restructure its loan agreements.
Investment bank DLJ will be charged with helping Iridium "in evaluating and reviewing
alternatives to restructure its indebtedness and reduce financing costs, in light of lower
than expected subscriber ramp-up and revenue generation," the company said in a
statement yesterday.
Iridium also said it does not expect to meet certain
subscriber goals by the end of the month as required by its
lenders, including having at least 27,000 subscribers for its
high-tech phone service.
Shares in the company fell more than 28 percent to 10.4375
in late afternoon trading today following yesterday's news, a
new 52-week low for the stock. Shares have traded as low as
12.625 and as high as 62.375 in the past 52 weeks. The
stock traded in the low 30s as recently as February.
The admission is the latest in a string of setbacks for the
high-flying company.
Iridium, which offers mobile phone service anywhere on Earth via a $5 billion, 66-satellite
network, said in March that it would not meet subscriber and revenue targets set by
creditors as conditions of its loans. Iridium was later granted a two-month waiver under its
$800 million senior secured credit facility, giving it until May 31 to reach certain revenue
and subscriber goals. The company said it had 10,294 subscribers at the end of March.
In addition to posting huge quarterly losses, Iridium has seen its chief executive and chief
financial officer resign, yet the firm filled the vacant CFO post yesterday. The stock is
trading near all-time lows and the company has been hit with a slew of class action
lawsuits in recent weeks.
"It's been a lot more difficult than anyone thought," said Antonette Goroch, an analyst at
The Carmel Group, a satellite and communications industry consulting firm. "They got their
satellites up there, but then they've just had problem after problem."
Separately, former CEO Ed Staiano sold nearly 75,000 Iridium shares worth about $1.1
million shortly after leaving the company in April, according to a Bloomberg report.
Bloomberg contributed to this report.
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