"Iridium Gets Another Extension From Lenders"
Friday May 28 4:42 PM ET
Iridium Gets Another Extension From Lenders
NEW YORK (Reuters) - Satellite telecommunications company Iridium World Communications Ltd (Nasdaq:IRID - news). Friday said it received another extension from its lenders, giving it until June 30 to prove it can meet certain customer and revenue targets.
Iridium also said it plans to use the next 30 days to get a consensus among its investors and creditors on a plan to restructure its debt. Iridium's Chief Financial Officer Leo Mondale said Thursday the company was aiming for a restructuring rather than declaring bankruptcy.
''This extension allows us to make the important changes in our marketing and distribution strategy, which will help us drive sales,'' Iridium's new Chief Executive John Richardson said in a prepared statement.
''At the same time, we will continue to work with our creditors, Motorola and our other strategic investors to identify the financial strategy required for commercial success,'' Richardson said.
Motorola Inc. (NYSE:MOT - news) owns about 18 percent of Iridium and has guaranteed a large portion of the company's debt.
The new 30-day extension is the second reprieve Iridium has received. The first, two-month extension would have expired at month's end. The company will default on its loans if it fails to meet the new deadline.
Iridium, which has 66 satellites in its network, recently hired Donaldson, Lufkin & Jenrette to advise it on restructuring its debt and reducing its financing costs.
Iridium has struggled to meet its financial and subscriber targets required as part of its $800 million credit facility.
The company, which had less than 10,300 customers at the end of the first quarter, must have 27,000 subscribers by the new deadline. The company said Thursday it was still not satisfied with its rate of customer growth but would not comment on its current subscriber levels.
Under the credit pacts, the company must also have $4 million in cash reserves and $30 million in cumulative accrued revenues. It had revenues of $1.45 million in the first quarter.
The company has suffered from problems with its marketing and distribution partners and from a lack of availability of telephone handsets. Iridium said it is working on these issues and expects to see improvement.
Iridium, which recently replaced several top executives, also plans to reduce costs internally and cut prices on its products and airtime.
Shares of Iridium gained 31 cents to $9.125 on Nasdaq, above its 12-month low of $7 but far below its 52-week high of $61.625.
(http://dailynews.yahoo.com/headlines/bs/story.html?s=v/nm/19990528/bs/telecom_iridium_2.html) |
