Iridium one step from bankruptcy
Company pins hopes on restructure -- if its creditors will let it
Troubled satellite mobile phone service Iridium yesterday admitted the full seriousness of its financial crisis and confessed that bankruptcy was one of the very few options left open to it. As the company prepares to face the music -- it is about to explain to its bank how it intends to pay back the $800 million it owes, a payment deferred by two months last March -- recently appointed CFO Leo Mondale yesterday said the company is "considering a restructuring rather than a bankruptcy". Mondale added that Iridium is currently negotiating hard with creditors, banks and its major shareholder, Motorola, to seek permission to restructure the company. "We believe our strategic partners will support us," he told attendees of the Banc of America Securities Growth Telecommunications Conference, held this week in New York. Understandably, Mondale was bullish about the company's future -- after all, at this stage there's little point in being anything else. "The fact that I'm here today ought to be indicative that I think we'll still be operating next week," he said, though many among his audience might well have viewed the company's viability a week further down the line more doubtfully. "We were having difficulty in marketing and selling," said Mondale, "but we have accomplished a lot of things. I think the situation we're in now is one we can get out of." "We are satisfied we have identified the problems," he added. All very well, but what is Iridium's management, led by interim CEO John Richardson, doing about them? The restructure is clearly the first stage -- two weeks ago the company employed investment bank Donaldson, Lufkin & Jenrette to advise it on cutting costs and restructuring its debt -- and it has been giving its sales team a good kicking. What about second stage? The answer unfortunately is that right now the second stage doesn't matter. If Iridium doesn't get permission to restructure, then closure will be left as the only real choice the company has left to it. ® Register Factoid Staff morale is clearly (and understandably) rather low at Iridium, and disgruntled Websters must be losing their respect for their senior staff. What else could be reason behind filing the photo of chairman Robert Kinzie under the highly deferential name "suit1.jpg", and CFO Leo Mondale as "suit3.jpg"? But who is "suit2", missing from the site -- and what, we wonder darkly, was his fate? See also Iridium CEO breaks orbit Iridium gets 60 day reprieve
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