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To: djane who wrote (6728)	8/21/1999 12:46:00 PM
From: djane	Read Replies (1) \| Respond to of 29987

Iridium Refuses To Trash System From the August 23, 1999, issue of Wireless Week By Monica Alleven Despite longtime predictions of Iridium LLC's ultimate demise, the satellite company last week doggedly tried to prevent its biggest assets from turning into "space junk." The latest restructuring proposal, still on the table as of late last week, called for holders of bonds and unsecured debt, including Motorola Inc., to convert their holdings into a 45 percent equity stake in the struggling company. The proposal didn't look attractive for those stragglers still holding onto the stock, which at around $3 stopped trading on Nasdaq Aug. 13. However, it's better than outright liquidation, another alternative that to some looks increasingly likely. Under the proposal, Iridium would seek a cash infusion of $500 million from new investors and current strategic partners, including 18 percent stakeholder Motorola. Principal vendor Motorola would grant Iridium a deferral on payments for operational contracts, and equity investors would accept a "substantial dilution" of their interests. That may sound like "pie in the sky," but the liquidation alternative doesn't look good, either. How many buyers are lined up to take control of 66 satellites, plus spares, for voice communications? If only one buyer emerged, Iridium would be forced to accept a bargain basement price--not a desirable scenario for backers of the $5 billion system. The other satellite competitors, such as upcoming data provider Teledesic LLC, use different satellite configurations. Some analysts said they expect Motorola, the banks and other strategic investors will come up with a plausible restructuring plan and give Iridium another go at it, mainly because the alternatives look so dismal. The more bearish analysts believe that strategy will simply land Iridium right back where it is today, but it could buy time for much-needed improvements to the technology. But if the market isn't there, as many have speculated, reorganizing won't be the answer. "In the end, bankruptcies are only legal proceedings. The business realities will always govern," said bankruptcy attorney Thomsen Young of Pachulski, Stang, Ziehl & Young Law Offices in Los Angeles. Iridium made its voluntary Chapter 11 filing Aug. 13 in U.S. Bankruptcy Court in Delaware. Earlier that day, noteholders filed involuntary petitions in New York. Experts said it would be to Iridium's benefit to have the case in Delaware, where courts typically side with companies over creditors, but by last week the venue had not yet been decided upon. For an estimated 20,000 subscribers, it was business as usual; the company still was supplying service. One partner, Infosat in Vancouver, British Columbia, received some calls from inquisitive customers, many of whom are in the oil and gas, emergency services and maritime industries. But no problems affected service, and Infosat remained hopeful Iridium would resolve its financial troubles and continue offering service. In fact, Iridium's partner in Mexico even launched services last week. While Iridium seeks a quick resolution to its reorganization within the next 30 days, bankruptcy experts expect the court proceedings will go forward at characteristically glacial speeds. If Iridium, its backers and the courts have their way, the satellite constellation won't turn into scrap metal anytime soon. Please send comments and suggestions on this Web site to wwweb@cahners.com Wireless Week, P.O. Box 266008, Highlands Ranch, CO 80163-6008 Voice: 303-470-4800, Fax: 303-470-4892 Published by Cahners Business Information ¸ Copyright 1999. All rights reserved.