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= = = Iridium files for Chapter 11 bankruptcy
By Corey Grice
Staff Writer, CNET= News.com
August 13, 1999, 11:40 a.m. PT

Satellite communicatio= ns service provider Iridium, after months of debt restructuring negotiation= s with its creditors, has agreed to file for bankruptcy protection, the com= pany said today.

The company, which has faced a series of significant setbacks this year an= d defaulted on more than $1.5 bi= llion in loans earlier this week, will seek a "comprehensive financial rest= ructuring" through a voluntary Chapter 11 filing in U.S. Bankruptcy Court i= n Delaware.

Under Chapter 11, a company = = = +5.2500=

Quote Sn= apshot
August 13, 1999, 11:04 a.m. PT
Iridium World Communications Inc. IRID
3.0625	= -1.187= 5	-27.94= %
Motorola Inc. MOT
93.0000	+5.98%
= by symbol = ; by name     More from CNET Investor Quot= es delayed 20+ minutes

continues to operate while = it draws up a debt-repayment plan under court supervision. Iridium provides= global mobile telephone service through a network of 66 satellites.

Following the news, stock in Iridium World Communications plunged another 2= 8 percent to 3.0625 in midday trading today. Shares have traded as high as = 49.875 and as low as 4.25 in the past 52 weeks. Iridium shares peaked in th= e low 70s in May of last year.

Despite Iridium's struggles, many analysts believe the market for satellite= phone services is a lucrative one. Market research firm Dataquest expects more than 10 millio= n satellite voice service subscribers by 2003. As such, a handful of would-= be competitors are readying similar satellite services even as Iridium file= s for bankruptcy. Globalstar and = the London-based ICO are among the leading challengers to Iridium's less-than-successful service. Iridium= ended March with only 10,000 customers.

Iridium said its major stakeholder= s, which includes Motorola, support its financial plan. Iridium's credi= tors already had granted the company several extensions for meeting ce= rtain revenue and subscriber targets. Iridium failed to meet most of those = goals.

"The action is the most efficient way to conclude Iridium's restructuring n= egotiations," John Richardson, Iridium's chief executive, said in a stateme= nt. "We are confident that Iridium will emerge from this process as a stron= ger and more vibrant company."

Motorola said it will continue its operational support of Iridium's satelli= te-based phone system. And, based on the progress so far, Motorola is "opti= mistic" that a restructuring plan can be finalized within 30 days, the comp= any said in a statement.

Earlier today, a group of bondholders separately filed an involuntary Chapter 11 bankruptcy petition against the cash-strapped company. The group= of bondholders holds about 25 percent of Iridium's $1.45 billion outstandi= ng senior notes. =

"We have been in active negotiations with the company for the past month. Despite the best efforts of the parties involved, consensual agreement coul= d not be reached on a restructuring plan," Talton Embry of Magten Asset Management Corporation, a member of the bondholder group, said in a prepare= d statement.

Iridium could not be immediately reached for comment. Motorola, which owns = 18 percent of Iridium, also could not be reached. The bondholders' bankruptcy petition was filed in the United States Bankruptcy Court in the = Southern District of New York.

Reuters contributed to this report.

See Story= in Context

 
Related news stories
• Iridium defaults on $1.5 billion= in loans August 11, 1999
• Motorola= says in talks with troubled Iridium August 3, 1999
• Creditors grant Iridium another extension June 30, 1999
• Iridium knocked back to earth April 23,= 1999

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