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Technology Stocks : IRID - Iridium World Communications IPO Announced! -- Ignore unavailable to you. Want to Upgrade?

To: Marty Rubin who wrote (2287)	8/9/1999 5:54:00 PM
From: Marty Rubin	Read Replies (1) \| Respond to of 2693

"Iridium Close To Reaching Pact With Debt Holders" (Source: DJ) August 9, 1999 Iridium Close To Reaching Pact With Debt Holders By PALLAVI GOGOI NEW YORK -- Iridium LLC is close to reaching a restructuring agreement with debt holders, according to people familiar with the negotiations. The restructuring package involves offering 44% of the company's equity to holders of $1.45 billion of Iridium's debt. It would also involve a further $400 million cash infusion from the Washington, D.C.-based satellite phone company's chief backer, Motorola Inc., along with a few other strategic investors. The cash injection would raise Motorola's stake in Iridium to 25% from 18%. If debt negotiations aren't successful, observers fear that Iridium could be pushed to bankruptcy as soon as Wednesday. Iridium has until Aug. 11 to meet what have now become difficult targets of subscribers and revenue set by banks holding loans totaling of $800 million. Though the company has so far indicated that bankruptcy is not a viable option, some analysts see that as the best route for the company. 'My opinion is that Chapter 11 should have been more viable,' said Eric Tutterow, high-yield telecommunications analyst at Bank of New York. 'They will have more time to restructure their debt and can focus on their business. Every month that ticks by is a month of foregone revenue,' he added. Besides, Iridium faces another Aug. 15 final deadline to pay $90 million in loan interest to bondholders. Two-thirds Approval Needed The proposed restructuring package is said to have been proposed by Schaumburg, Ill-based electronics company Motorola. One analyst said that it was more likely that bond holders would agree to this package. 'Earlier, Iridium was offering only 25% equity and this seems like a pretty nice chunk,' one observer noted. Motorola wouldn't confirm or deny the rumors. 'The negotiations are continuing and we are not commenting on the day-to-day progress,' said Scott Wyman, a Motorola spokesman. Any restructuring package will have to be approved by at least two-thirds of debt holders, analysts said. A Los Angeles-based investment bank, Houlihan Lokey Howard & Zukin is representing bond holders in the negotiating process with Iridium. Houlihan Lokey has indicated that it does have the required two-thirds majority, sources said. However, some doubt that the consent of so many debt holders can be reached immediately. Houlihan Lokey didn't return phone calls seeking comment. Observers say that Iridium has yet another route that it could pursue. 'Iridium can petition a federal judge to put a stay in place for about three months if the process gets out of hand,' said a person familiar with the negotiation process. 'If Iridium can convince the judge that they're far along in the negotiating process, he will grant it,' he added. Iridium didn't immediately return phone calls. Monday, Iridium's stock price was up 1/4 to 6 3/8 early afternoon. Its bonds were quoted at 24 bid and 26 offered, up 2 points from Friday. -By Pallavi Gogoi; 201-938-2122; pallavi.gogoi@dowjones.com Copyright © 1999 Dow Jones & Company, Inc. All Rights Reserved.

To: Marty Rubin who wrote (2287)	8/9/1999 5:54:00 PM
From: Marty Rubin	Respond to of 2693

Junk Bonds: Veridian Postpones as Rising Rates Cool New Sales New York, Aug. 9 (Bloomberg) -- Veridian Corp. joined at least nine other companies which canceled or postponed $2.2 billion of junk bond sales the past two weeks, amid rising interest rates and lackluster demand. Veridian, which provides information technology services and collects 95 percent of its revenue from military and other U.S. government contracts, is expected to delay its $175 million sale of eight-year senior subordinated notes until September. The 47 basis point surge in yields on 10-year Treasury notes over the past three weeks to 6.13 percent puts the benchmark rate for corporate borrowers at the highest since October 1997. At the same time, more than $1 billion of withdrawals from high-yield mutual funds the past two weeks left fund managers with little to spend on new issues. ''There are a lot more companies out there needing to borrow, than there are people willing to lend,'' said Roger King, who helps manage $2.5 billion of high-yield bonds at Dreyfus Corp. in New York. King, who hasn't bought new sales in about a year, said ''more deals could get pulled.'' McLeodUSA Inc., Mueller Corp., and Iaxis BV are among the string of businesses that opted to wait rather than tap ailing investor appetites. The delays, and a three-day high-yield bond conference organized by Donaldson, Lufkin & Jenrette Securities, the No. 1 underwriter of junk bonds so far this year, are expected to cool the pace of new sales this week. Only $1.7 billion of bonds sold last week, down from $6 billion a week earlier. Prices Decline Prices of bonds rated below ''Baa3'' by Moody's Investors Service and ''BBB-'' by Standard & Poor's declined 0.1 percent today, according to a Merrill Lynch & Co. high-yield bond index. With 10-year Treasury notes falling about 5/8 point, the yield spread between junk bonds and 10-year Treasury notes narrowed about eight basis points to 471 basis points. The most actively traded bonds such as Level 3 Communications Inc. fell most in recent weeks, because they're the only bonds investors can sell to raise cash. Smaller, infrequently traded issues haven't yet been marked down as much, which investors said is skewing indexes, causing junk bond yields to remain lower than they would be if those bonds were to trade. Level 3's 9 1/8 percent notes due in 2008 fell about 7 points since July 19, increasing the yield to 10.41 percent and expanding the yield spread over Treasuries by about 80 basis points to 436.5 basis point, according to Bloomberg analytics. ''The bellwether names are going to be sold first, because there are more likely to be buyers, '' said Edward Mally, head of high-yield bond research at CIBC World Markets in New York. ''I don't anticipate yield spreads will tighten until next year.'' (I Part Starts Here --Marty*) Elsewhere today, bonds of Iridium LLC, the cash-strapped global satellite telephone company, rose about 3 points or $30 per $1,000 bond amid expectations the company may be on the brink or reorganizing its debt. Iridium has until Wednesday to come up with a plan to avoid defaulting on an $800 million syndicated bank loan and to avert a potential court-imposed bankruptcy. At a price of about 25, Iridium's 14 percent notes due in 2005 have tumbled 74 percent since February. ''Buying Iridium was a mistake,'' said Dreyfus' King, who still holds some of the debt. While Iridium has a head-start on its competitors such as Globalstar Telecommunications Ltd., King said its technology was outdated by the time the service began. Still, ''there's still a strong bid'' on the bonds, whose price averaged about 20 1/4 in June and July. ''Someone could be about to buy up the whole thing,'' King said. Aug/09/1999 17:31 (C) Copyright 1999 Bloomberg L.P. (Please Note: Other than parenthesis for "I* Part Starts Here," it's all quote --Marty)