Iridium South Pacific escapes Chapter 11 fallout

Iridium South Pacific is yet to experience any backlash or impact following the news that US-based Iridium operator, Iridium LLC has filed for Chapter 11 bankruptcy protection.

According to Carlton Jennings, CEO of Iridium South Pacific, there has been "absolutely" no impact on the company's operation.

"Our customers have looked at our business and value us on the service that we provide and value that we provide and to them it's nothing, There's been no impact," he said.

"From our perspective, operationally it has no impact, Motorola is the company that operates and maintains the satellite network . . . that includes the ground stations, the connections, and they've come out very strongly and said they're backing that and operating it.

"For us, it's business as usual, and actually business is doing quite well," he said.

Jennings said Iridium South Pacific is an independent Australian telecommunications carrier owned by DDI Corporation and Kyocera. It trades as a separate entity to Iridium LLC.

He said there are 12 different Iridium operations around the world, including Nippon Iridium, Nippon South East Asia and Iridium LLC and Iridium South Pacific.

"Certainly we're disappointed that one of these companies has to do a restructure of its finances, but it's just one of the companies," Jennings said.

Jennings said he is confident Iridium LLC will be able to transform itself into a healthy company.

"They are not going to be unsuccessful with their reorganisation. All the parties agreed that it was in Iridium LLC's best interests to go through the financial restructure to make it a very healthy company.

"We certainly support them doing that in order to get themselves healthy," Jennings told Computerworld"Iridium LLC filed to restructure its finance, it did not file to turn off the switch."

Meanwhile, late last week, Iridium LLC 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. 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 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."

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