Iridium to receive $75m from Teledesic's McCaw
Rescue cash injection three times anticipated investment
Teledesic boss Craig McCaw's plan to pump rescue money into ailing cellphone-by-satellite operation Iridium is to go ahead. Earlier this week, it emerged that just such an investment, to the tune of at least $20 million, would be made by a McCaw-led group of investors. It now appears that McCaw and co. will give Iridium $74.6 million, allowing it to continue operations after 15 February when a highly exasperated Motorola has said it will stop propping the company up. The investment must first receive the approval of the US bankruptcy court. With McCaw already running satellite-based broadband networking companies Teledesic and ICO Global Communications, his moves on Iridium may concern the court. But since Iridium is effectively up a certain creek without a certain instrument without McCaw's money, we suspect the judge will agree to it. Iridium's management has been trying to come up with a restructuring plan since early last summer -- even before the company went into Chapter 11 protection -- and has largely failed to produce a plan that might satisfy its investors. It's that unwillingness to support Iridium by investors that has finally forced the company's biggest backer, Motorola, to wash its hands of the venture. That neatly leaves room for McCaw to step in and take over, with the ultimate goal of winning control of Iridium. Such is the colossal cost of setting up satellite ventures, that it's only by combining these three operations that the right economies of scale can be attained to make it all cost-effective. ®
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