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Iridium defaults on debt

Bankruptcy one step closer...

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Troubled satellite cellphone company Iridium's woes worsened yesterday when it defaulted on its latest loan payment. After three deadline extensions, Iridium was due to pay back $800 million and a further $750 million from a second loan, triggered by its failure to repay the first. In three days' time, the company has to find $90 million to make an interest payment on bonds worth $1.45 billion. It has already had the deadline on that payment delayed. The sound you can hear in the background are Motorola executives panicking as they realise they may now have to deal with the very real possibility that Iridium is going to enter insolvency -- and that Moto will have to pick up the tab. Motorola has been desperately trying to rally fellow Iridium investors to support the ailing satellite company financially. Last week, Motorola president and COO Robert Growney claimed negotiations with other Iridium partners had gone well. However, at the same time Chase Manhattan Bank, which arranged the original $800 million multi-bank loan, said it would give Iridium no more leeway -- unless Motorola can be persuaded to pay it $300 million in loan guarantees. And it's entirely possible that it will. In its last financial statement, the company said it expected to take a major hit to back up Iridium in this quarter. It paid out $206 million to Iridium in Q2, and said it expected that to increase significantly in Q3, the current quarter. ® See also US government props up Iridium Motorola demands help keeping Iridium in orbit Iridium fires 80 staff Iridium to cut call charges Iridium granted 30-day reprieve

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