The second mobile satellite company in less than a month filed for Chapter 11 bankruptcy in a U.S. court at the end of August. ICO Global Communications Holdings and three affiliates filed for protection from creditors. This followed Iridium’s bankruptcy filing earlier in the month.
ICO needs additional financing to continue its low-earth-orbit (LEO) satellite network buildout. ICO’s investors include Hughes Electronics, which contributed about US$500 million, and Comsat Corp., which has a US$70 million stake.
ICO’s filing came several weeks after investors failed to raise the US$600 million needed to continue developing the system.
“A number of our strategic investors have confirmed their continuing interest in providing the company with financial support,” commented Chief Executive Officer Richard Greco. “Our Chapter 11 filing should provide ICO with the extra time needed to reorganize, recapitalize and complete our financing.”
Iridium filed for Chapter 11 bankruptcy protection 13 August after defaulting on its US$800 million senior secured credit facility and its US$750 million guaranteed credit facility. Iridium said it will continue operating and selling the service during the bankruptcy process.
The company had missed several deadlines to reach subscriber and revenue minimums stipulated in its loan covenants, causing it to default on its bank loans.
Motorola, which owns 18 percent of Iridium, said it will continue its full operational support for the company.
Globalstar, another mobile satellite service provider, is scheduled to begin initial commercial operation in September or October.
