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

To: FDHIII who wrote (2330)	8/12/1999 12:25:00 AM
From: Marty Rubin	Respond to of 2693

analyst comment in 4th paragraph, Motorola comment in 9th Iridium Declares Default on $1.5 Bln in Bank Loans (Update1) Iridium Declares Default on $1.5 Bln in Bank Loans (Update1) (Updates with analyst comment in 4th paragraph, Motorola comment in 9th.) Washington, Aug. 11 (Bloomberg) -- Iridium LLC, the cash- strapped satellite-telephone company, said it defaulted on bank loans totaling more than $1.5 billion after its lenders failed to extend today's deadline for the company to meet conditions. Iridium's banks had granted three extensions, most recently in June, for the company to meet conditions on about $800 million in syndicated bank loans. Iridium also defaulted on a $750 million bank loan guaranteed by Motorola Inc., the biggest investor in the 66-satellite network. The default is tied up in the wrangling over a restructuring of Iridium, which doesn't have the money to pay its debts after getting only a fraction of the subscribers it had promised. Iridium's banks, led by Chase Manhattan Corp., are trying to protect their own interests as Iridium negotiates a settlement with both its banks and bondholders. ''The banks are playing hardball here,'' said Banc of America Securities analyst Armand Musey, who added that a negotiated settlement is still the most likely outcome. ''I don't think the banks really intend to put the company into receivership. If this goes into bankruptcy the value of the company drops dramatically and everybody loses out.'' Monday Deadline Iridium faces another deadline Monday to make an interest payment of $90 million on $1.45 billion in bonds. It's possible the company will also default on that payment, and the banks may have forced today's default to protect their interests in that event, Musey said. ''They want to make sure (Iridium) defaults to the banks first so they don't lose their ability to control the process,'' he said. Iridium officials didn't return calls seeking comment. One open question is Chase Manhattan's assertion that Motorola should put up $300 million to guarantee payments. Iridium and Motorola have both denied Chase's claims, which Iridium disclosed in a regulatory filing last week. ''We will encourage all relevant parties to continue negotiations in an effort to agree upon a plan to restructure Iridium's debt,'' said Scott Wyman, a Motorola spokesman. He declined to comment further. Iridium's telephones allow callers to place or take calls from practically anywhere. Yet the company has won only 20,000 of the 500,000 subscribers it had promised by year's end. Analysts say customers have been discouraged by high prices, and the bulkiness of its brick-sized phones. The $800 million loan was arranged by Chase Manhattan and Barclays Plc and syndicated to 23 banks and institutional investors. The announcement came after the market had closed. The company's 14 percent bonds due 2005 were unchanged at 24.33 cents on the dollar. They traded as high as 90.45 cents in February. Shares of Iridium World Communications Ltd., the company's public investment entity, fell 3/8 to 5 15/16. They've fallen 85 percent this year. ©1999 Bloomberg L.P. All rights reserved.