By Tony Hallett, 17 August 1999 00:20
NEWS Iridium has filed for Chapter 11 bankruptcy in the US, a move it insists helps its long-term prospects. The satellite telephony and paging company last week defaulted on more than $1.5bn worth of loans, and with rival ICO Global Communications also struggling to secure financing, the future of mobile satellite service (MSS) providers is in question. Early last Friday, bondholders thought to hold about a quarter of the company's $1.45bn outstanding senior notes filed an involuntary Chapter 11 petition, but Iridium claims its voluntary filing has the support of major investors Motorola and Nippon Iridium. The aim is to have a degree of protection while finances are restructured. In a statement, Iridium CEO, John Richardson, said: "We are confident that Iridium will emerge from this process as a stronger and more vibrant company in the telecommunications marketplace." Motorola, despite rumours it may cut its losses and abandon the $5bn project, said it will continue investing in Iridium and maintain operational support. Nippon Iridium similarly said it has faith in the company's "long-term viability", which includes offering services to remote workers such as those at sea, or in deserts. However, analysts have said Iridium's woes could sink the whole MSS industry. ICO and Globalstar, whose services aren't yet available, have had their fair share of problems, and the success of terrestrial digital services has dented original take-up projections.
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