Iridium, the financially-troubled satellite phone provider, has filed a proposed restructuring program with the US Securities and Exchange Commission that would convert debt it owes bondholders and its principal backer, Motorola Inc, into 45 per cent ownership in the company.
The proposal asks holders of $US1.45 billion in bonds to convert the debt into a 33 per cent equity share of the company, according to the SEC filing on Tuesday. Motorola, which has $500 million in outstanding contractual obligations from Iridium, would be asked to take over another 12 per cent of the company.
Banks, which loaned Iridium a total $1.5 billion, are asked to extend their repayment schedules. Motorola has guaranteed $750 million of those loans. Motorola already owns an 18 per cent share of Iridium, but that stake would be diluted by the proposal.
Iridium said it was also seeking $500 million in equity investments from current investors and others.
Iridium filed for Chapter 11 bankruptcy protection August 13, two days after defaulting on its $1.5 billion loan.
The company's ambitious venture to provide satellite phone service in remote areas of the world without wireless or land line telephone communications has suffered setbacks due to poor marketing and distribution delays. Iridium has 66 low-earth orbiting satellites that serve about 20,000 customers.
Iridium will continue to meet with its bondholders committee and other lenders and owners to try to win approval of the restructuring plan, said Michelle Lyle, an Iridium spokeswoman.
A Motorola official said the company welcomed the increased participation the proposal gave Motorola and other investors.
"It's a major requirement of any restructuring plan," said Scott Wyman, a Motorola spokesman. "We are optimistic the restructuring plan can be agreed to within the next 30 days and we are optimistic about the future of satellite communications."