Satellite Co. Faces Troubles
May 31, 1999
Hard-hit Iridium may be in bigger trouble than some expect, according to market analysts.
Iridium's high yield paper, totaling just over $1.4 billion outstanding in four issues, all of which come due in 2005, is trading in the low 20s, a severe drop from the 50s and 60s a few months ago.
But even at the distressed levels, analysts has been saying that majority shareholder Motorola probably will save the satellite company simply because it has too much at stake.
However, last week, Motorola, which owns 18% of Iridium, announced it was scaling back on its other satellite project, Teledesic, which it was developing jointly with Bill Gates and telecom player Craig McCaw. And some in the industry speculated that the reason Motorola pulled back was to put more of a focus on Iridium, which is currently in negotiations with bankers and bondholders.
Iridium, a 66-satellite communications network, took $5 billion and 10 years to get off the ground late last year, and has seen operational setbacks and financial woes ever since, investors said.