Iridium Files For Chapter 11 Bankruptcy

Satellite telecommunications company Iridium LLC Friday

filed a voluntary Chapter 11 bankruptcy petition, just two days after the cash-strapped

company defaulted on more than $1.5 billion in loans. Iridium, which provides phone

service through a network of 66 satellites, has suffered from debt woes,

slower-than-expected subscriber growth, marketing and distribution missteps and technical

problems with its telephone handsets. Iridium plans to continue operating during the

bankruptcy proceeding.

"The major stakeholders in this restructuring --

banks, bondholders and Iridium's strategic partners -- have voiced support for this course

of action. Iridium believes they will continue to cooperate during this process,"

Iridium said in a prepared statement. Shares of Iridium closed down $1.1875 at $3.06 on

the Nasdaq, after touching a fresh low of $2.75 earlier in the session. That compares with

a 52-week high of $49.875. Iridium's bonds dropped about 30 percent to trade at about 13

cents on the dollar, a bond trader said. Earlier Friday, a group of bondholders, who hold

about 25 percent of Iridium's $1.45 billion outstanding senior notes, also filed an

involuntary Chapter 11 bankruptcy petition against Iridium.

Iridium's Chapter 11 filing was made in the U.S. Bankruptcy

Court in Delaware. The bondholders' filing was made in New York. Motorola Inc., which owns

18 percent of Iridium, expressed support for the Iridium business from a financial and

operational perspective, and said it thought a restructuring plan could be drawn up within

30 days. Motorola said it would maintain its full operational support for Iridium, and all

current and future subscribers during the reorganization process. It will continue to

invest in the technology and to develop the next generation of Iridium products. Shares of

Motorola jumped $4.50 to $92.25 on the New York Stock Exchange as investors viewed the

bankruptcy filing as a sign Motorola will not bail Iridium out on its own, analysts said.