WASHINGTON (03/17/2000) - Iridium LLC, unable to find a qualified buyer to take on the company's debt and its constellation of 66 satellites, reportedly told a bankruptcy court today that its service will end as of midnight tonight.
Iridium filed a document with the U.S. Bankruptcy Court for the Southern District of New York ahead of a scheduled hearing today, saying a buyer couldn't be found and that Motorola Inc., Iridium's principle backer, would shut down the service, according to a report in the Wall Street Journal's Interactive Edition. The satellites would be left to burn up on re-entry into the Earth's atmosphere, the Journal said.
Iridium has been aggressively seeking a buyer since an investment group led by Eagle River Investments LLC decided against submitting a plan to buy the satellite company, which filed for bankruptcy protection in August of last year after defaulting on two loans. [See "Iridium's White Knight McCaw Withdraws Offer," March 3.]Motorola and other investors put together additional loans to keep Iridium afloat while a buyer was sought, but that financing expired Feb. 15. Eagle River then stepped in with US$5 million in financing to maintain Iridium's operations through March 6.
When Eagle River, an investment management firm owned by Craig McCaw that has interests in several telecommunication firms, including Teledesic LLC, decided not to pursue acquiring Iridium, Eagle River said it planned to focus resources instead on developing satellite-based data services.
Iridium was granted a funding extension on March 6 to operate only through today, according to a notice posted on the company's Web site.
Calls to Iridium and Motorola were not returned today. Motorola has informed customers who bought Iridium service directly from Motorola that the service will be shut down at 11:59 p.m., Eastern Standard Time, today unless a qualified buyer is found, according to information on Iridium's Web site.
Analysts quoted by the Journal said it's unlikely there will be an investor interested in acquiring Iridium at the last minute today. The company had debts totaling about $4.4 billion when it filed for bankruptcy protection.
Iridium, in Washington, D.C., can be reached at +1-202-408-3800 or at http://www.iridium.com/. Motorola, based in Schaumburg, Illinois, can be contacted at +1-847-576-5000 or at http://www.mot.com/.