With three new investors injecting a fresh $310 million into its low-earth-orbiting satellite project, Iridium Inc. said it has completed its planned equity financing.
That means the Motorola Inc.-led international group now can make debt financing arrangements to fund the remainder of its commitments.
Iridium seeks to set up a worldwide system of 66 low-earth-orbiting satellites that will support hand-held, wireless personal communications. The first launch now is scheduled for 1997; original plans called for a 1996 launch date. Commercial service could begin in 1998.
To date, Iridium’s 18 international investors have committed a total of $1.57 billion, bringing committed equity close to the group’s stated goal of $1.6 billion. Estimated cost of the system is $3.4 billion.
Recently announced investors include:
Vebacom of Germany, an arm of the German industrial and telecommunications conglomerate VEBA AG. Vebacom will invest at least $140 million to acquire the northern and western European Iridium gateway territories, and will receive two seats on the Iridium board of directors. Vebacom will hold a 10 percent stake in the company.
Of the $140 million, $70 million is new investment and $70 million will be assumed as a portion of Motorola’s investment commitment.
Korea Mobile Telecommunications Corp., which is leading a group of Korean companies investing $70 million.
KMT will hold one seat on the board and have rights to the Korean Iridium gateway territory of North and South Korea.
Iridium SudAmerica, a consortium investing $100 million. It is comprised of two previously-committed investors, Andes-Caribe and Motorola. The new player is Inepar SA Industria e Construcoes, a publicly traded Brazilian company with extensive holdings in electricity and telecommunications.
SudAmerica will have two seats on the Iridium board and will provide services throughout South America and the Caribbean.
According to plans filed with the U.S. Securities and Exchange Commission in 1992, Motorola wants to sell 85 percent of the Iridium network. Iridium Inc. has signed a $3.37 billion contract to purchase the Iridium space system from Motorola’s Satellite Communications Division.
“With the commitment of the United States government to license low-earth-orbit satellite systems by the end of January 1995, and the associated grant of interim construction waivers, satellite PCS will be available worldwide via the Iridium system by the end of 1998,” said Robert Kinzie, Iridium chairman and chief operating officer.
That means Iridium’s personal communications services customers will be able to place or receive telephone calls on Iridium handheld, pocket-size equipment anywhere in the world. Services will include digital voice, data, facsimile and paging. Planners have set transmission rates at 4.8 kilobits per second for voice and 2400 baud for data. The system will use both Frequency Division Multiple Access and Time Division Multiple Access modulation.
The Federal Communications Commission has given Motorola an experimental license to construct the system and show its feasibility. Motorola’s satellite division is constructing the first five satellites. Lockheed Corp. will design and construct the satellite bus, which will be shipped to the Motorola facility in Chandler, Ariz.
Raytheon Corp. will design the antenna for communications between ground stations and Iridium phones.