BANGALORE: Iridium World Communications said it had defaulted on loans worth over $1.5
billion, pushing the struggling operator of a $5 billion global satellite
telecommunications network another step closer to insolvency.
The defaults on an $800 million loan and another $750 million loan occurred after
Iridium failed to meet customer and revenue growth targets required under the $800 million
loan. Its third extension on the $800 million senior secured loan expired, triggering the
subsequent default on the other loan. This has the potential to lead Iridium to bankruptcy
and could also hurt telecommunications equipments supplier Motorola Inc. Motorola holds
about 18 per cent of Iridium equity. Motorola is Iridium's original backer, a key
shareholder and one of its loan guarantors. Iridium has suffered from slow market,
distribution missteps and technical problems.
While, it had a global target subscriber base of about 50,000 by the middle of this
year, it has been able to achieve only about 20,000 so far. In India, additionally, it has
run into a few regulatory and technical hurdles, the removal of which are key to its
survival.