Court approves latest stage of McCaw's ICO ‘rescue’

Entrepreneur Craig McCaw's attempt to rescue -- and in the process take control -- troubled satellite networking company ICO Global Communications on Friday won the backing of the US bankruptcy court. Last month, the court allowed McCaw to pump in $150 million in interim debtor-in-possession financing. The latest ruling permits McCaw to take that figure to $225 million and throw in a further $275 million in second-round financing next January. McCaw's plan also calls for a further $700 million to be injected into ICO, taking the total investment to $1.2 billion. However, that part of the plan has yet to be approved by the bankruptcy court, but its approval seems now little more than a formality. ICO said McCaw's money would be used to fund the conversion of its as-yet-unlaunched satellite network from a cellphone system along the lines of the one run by Iridium into a broadband data network not dissimilar to the one planned by McCaw's company, Teledesic. ICO plans to launch its satellite network sometime in Q2 2001. McCaw isn't the only investor in the ICO recovery plan, but he remains the largest. Of the $700 million inject yet to be approved by the court, for instance, he will put up 62 per cent, with the remaining 38 per cent being supplied by Indian media mogul Subhash Chandra. Meanwhile, McCaw's focus on satellite-based networks is now turning to Iridium, the other bankrupt satellite service. Sources suggest McCaw and Iridium are close to signing a rescue deal which, like the ICO plan, would see a McCaw-led consortium of investors pump money into the ailing company in return for McCaw's elevation to chairman of the board or some similar senior executive role. Given the problems Iridium's biggest shareholder, Motorola, has had persuading the satellite company's other institutional investors to back the management's restructuring plan, some kind of 'passing the buck to McCaw' move seems a very likely possibility, ultimately leading to a unification of the three operations -- Teledesic, ICO and Iridium -- into a single business. With Teledesic keen to get up and running sooner than later, using ICO's in-production and Iridium's already launched satellites to provide data and voice communications, respectively would certainly be a major step in that directions. ® Related Stories ICO wins court approval for McCaw's $150m cash injection Teledesic's McCaw to bail out ICO Iridium rival ICO plans Teledesic makeover Teledesic to launch sooner than expected