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To: djane who wrote (6457)	8/12/1999 7:13:00 PM
From: djane	Read Replies (1) \| Respond to of 29987

CBS. Debt fallout nukes shares of Iridium. Satellite telecom network reels anew, defaulting on loans (articles via I* yahoo thread) CBS Marketwatch 8/12/99 4:30PM Screamers By Sam Ames, CBS MarketWatch Last Update: 4:36 PM ET Aug 12, 1999 NewsWatch WASHINGTON (CBS.MW) -- Iridium World Communications shares screamed down 28 percent Thursday as the struggling satellite telecommunications network moved a step closer to bankruptcy. Iridium (IRID: news, msgs) said it defaulted on more than $1.5 billion in loans after failing to meet customer and revenue growth targets required on an $800 million loan, the third extension of which expired Wednesday. The expiration triggered the default on that loan and another for $750 million. Iridium did not seek another extension, spokeswoman Michelle Lyle told Reuters. The default also delivers a blow to Motorola (MOT: news, msgs), Iridium's 18 percent owner, and its loan guarantor. Shares of Iridium set a new 52 week low, clsoing down 1 11/16 to 4 1/4. The stock's 52 week high point was 100 3/16. Shares of Motorola fell 5 to 87 3/4. Motorola is the guarantor of the $750 million loan in default. The other $800 million loan is secured by another party, according to Motorola, whose spokesman said creditors would work on plans to restructure Iridium's debt. Analyst William Kidd at C.E. Unterberg Towbin said that although the banks technically could force Iridium into bankruptcy, he believed they would not act until seeing how they would fare under a restructuring plan. "Right now the banks are giving the company some period of time to see if they can pull this one out," Kidd said. A decision by the banks "would be days at a minimum," he said. A month, however, would not be too soon, he added. "Odds are that there's a 70 percent chance they will restructure outside of bankruptcy," said satellite communications analyst Armand Mussey of Bank of America Securities. "It's in every investor's interest to keep them out of bankruptcy, because bankruptcy shrinks the size of the pie available to Motorola, banks, and bondholders." said Mussey. Iridium suffered from slower-than-expected subscriber growth, marketing and distribution problems and technical troubles. The company said it is continuing to consider options for restructuring. "It's kind of like a downward spiral" commented Mussey. Once Iridium missed its first customer subscription projections, it had less revenue available for advertising, which resulted in the company missing its revenue and subscription projections even further. "Then they have so little money left over that the banks start coming after them and meanwhile all the interest on their loans keeps accumulating." the analyst said. On Aug. 15, Iridium must meet a $90 million interest payment on its $1.45 billion in bonds. The payment was originally due July 15, but Iridium exercised a 30-day grace period. Sam Ames is an online reporter for CBS MarketWatch.