BOSTON (07/28/2000) - New York merchant bank Castle Harlan Inc. will not go forward with trying to acquire the assets of bankrupt satellite communications system, Iridium LLC, the company said Friday.
"Our due diligence and marketing studies were unable to confirm that Iridium would generate even low levels of revenue with a high degree of certainty," the company said in a statement. "The result is that we must conclude that it would be economically inadvisable to move forward with the acquisition of the company's assets."
In June, during Iridium's bankruptcy proceedings, a deal was proposed whereby Castle Harlan would pay US$50 million for the bulk of Iridium's assets. The assets included Iridium's constellation of 66 communications satellites, its trademarks and tradenames and a center in Reston, Virginia, court documents revealed.
Castle Harlan, moreover, would have paid Iridium an additional $900,000 per month from the time the court gave its approval until the deal was actually closed. Iridium's lenders also would have received a 5 percent stake in any future company that came out of the acquisition.
The New York merchant bank had planned to pay for Iridium with $630 million in equity from the Castle Harlan Partners III investment fund.
Motorola Inc. was the principal backer behind the $5 billion Iridium venture that filed for bankruptcy protection in August 1999. In March of this year, Iridium began shutting down its satellite phone service. Iridium failed to find a buyer with the company's debt reported to total $4.4 billion.
Also in March, Merit Studios Inc. attempted to acquire Iridium with the hopes of offering data services over the network. Venture Partners Inc. also expressed interest for a time in offering cellular telephone service in Latin America.
Castle Harlan, in New York, can be reached at +1-212-644-8600 or on the Web at http://www.castleharlan.com/.