Chase Manhattan Bank filed papers in the U.S. District Court in Delaware June 9 alleging 17 members of Iridium L.L.C. have not met any reserve capital call obligations that secure the $800 million loan Chase made to the now-bankrupt satellite company’s subsidiary, Iridium Operating L.L.C., in December 1998. Iridium L.L.C. is not a defendant in the lawsuit.
Chase is suing for $242.7 million, which includes $80 million the bank hopes to recover from Iridium units in Africa, Canada, Hong Kong, India, the Middle East and South America.
Iridium members were required by the loan agreement to buy additional units in Iridium in the event of a payment default, Chase said. Such events had occurred as of Aug. 12, 1999, and Chase said it would treat the obligations as demand loans.
Iridium did not return requests for comment by RCR press time.
In addition, Chase is seeking $10 million each from the Krunichev State Research and Production Space Center in Russia, Korea Mobile Telecommunications Corp., Pacific Electric Wire & Cable Co. Ltd., Sprint Iridium Inc. and Thai Satellite Telecommunications Co. Ltd.
Chase also filed claims against Motorola Inc. for $44.5 million; Nippon Iridium Ltd. for $30 million; Vebacom Holdings Inc. for $22.7 million; STET-Societa Finanziaria Telefonica per Azioni for $7.5 million; Lockheed Martin Corp. for $5 million; and Raytheon Co. for $3 million.
This latest lawsuit could have a negative impact on Castle Harlan Inc.’s bid to acquire Iridium. Iridium filed a motion in the U.S. Bankruptcy Court for the Southern District of New York three weeks ago to gain approval to sell its assets to the New York-based merchant bank for $50 million.
Castle Harlan is in the process of due diligence to determine the viability of Iridium’s business plan and sort out other matters, including an agreement with Motorola, which has a large stake in Iridium. Castle Harlan spokesman Charles Storer said the lawsuit might be a factor, but would not comment further.
Castle Harlan has until July 21 to complete the due diligence.
