Iridium Eyes Restructure, Not Bankruptcy
Thursday May 27 1:39 PM ET
NEW YORK (Reuters) - Satellite telecommunications company Iridium LLC said Thursday it is aiming for a restructuring
rather than bankruptcy and it remains in active talks with its creditors and vendors.
''We are considering a restructuring rather than a bankruptcy,'' Iridium Chief Financial Officer Leo Mondale said at the Banc of
America Securities Growth Telecommunications Conference in New York.
The company does not yet have a formal agreement to restructure its debt, but Mondale said it is in active negotiations with its
creditors, bankers, vendors and main investor Motorola Inc. .
''We believe our strategic partners will support us as we work to readjust our capital structure,'' Mondale said.
Two weeks ago, Iridium hired Donaldson Lufkin & Jenrette to advise it on restructuring its debt and reducing its financing
costs. The company previously said it expected to complete those discussions by the end of May.
In March, Iridium received a two-month extension to prove it could meet revenue and subscriber targets but has since said it
did not expect to meet those targets.
Mondale declined to comment on the status of the talks with lenders.
''The fact that I'm here today ought to be indicative that I think we'll still be operating next week,'' Mondale said.
Iridium, which had 10,294 customers at the end of the first quarter, said it was not happy with its rate of customer growth.
''We are still not satisfied with the rate we are picking up, but we are satisfied that we have identified the problems,'' Mondale
said.
He said the technical problems with telephone handsets made by Kyocera Corp. of Japan have been mostly resolved and
large-scale production of the phones should begin shortly.
Problems with the Motorola-produced phones have been resolved and the phones are now available in large quantities.
Mondale said the company expected to cut costs internally in all areas, including operations and maintenance, operating
expenses and financing.
The company also expects to announce shortly price cuts for its products and airtime but declined to provide specifics
Thursday.
''We were having difficulty in marketing and selling, but we have accomplished a lot of things. I think the situation we're in now
is one we can get out of,'' Mondale said.
Shares of Iridium rose $1.19 on the Nasdaq to $8.75 each, well below their one-year high of $61.625 but above their
one-year low of $7.00
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