Iridium Gets Temporary Reprieve
NEW YORK (AP) _ The Iridium satellite venture won another temporary reprieve on Monday as lead investor Motorola agreed to hold off on plans to destroy the bankrupt company’s $5 billion mobile phone network in space.
Motorola told a bankruptcy court that it would keep the satellites running through Aug. 9 so Iridium can pursue a potential bailout by parties affiliated with Castle Harlan Inc., the New York investment bank that on Friday withdraw a $50 million plan to buy Iridium’s assets.
However, if those talks fail to produce a viable plan to save the bankrupt company, Motorola will have court clearance to proceed with plans to pull the satellites from orbit so they burn up in the Earth’s atmosphere.
Motorola has quietly kept the satellites running _ providing limited phone service at a cost of millions of dollars per month _ in hopes that new investors might rescue Iridium from the apparent death sentence handed down in March, when the bankruptcy court granted permission for the network to be destroyed.
Washington-based Iridium launched its ``anywhere-on-Earth″ mobile phone service in the fall of 1998, but filed for bankruptcy protection by last August with debts of $4.4 billion.
From the outset, customers complained about Iridium’s inconsistent service and astronomical prices, including calling charges as high as $9 a minute and handsets costing $3,500. Prices were slashed last summer for both calls and the handsets, but Iridium’s subscriber count only reached about 55,000 by the time commercial service was halted earlier this year.
Castle Harlan first announced its interest in the satellite company back in June, prompting the bankruptcy court to approve a 45-day period for the investment firm to examine Iridium’s books more closely.
But just like Craig McCaw, the wireless magnate who briefly planned to bail out Iridium earlier this year, Castle Harlan clearly wasn’t pleased with what it discovered.