Just two months ago, Castle Harlan Inc. stepped in and granted Iridium L.L.C. a stay of execution, offering to purchase the fledgling company for $50 million. Iridium’s bubble burst, however, when late last month the same bank withdrew its offer, setting in motion once again the process that ultimately could lead to Iridium’s demise.
“It’s not a shock, but it still certainly is a sad day,” said Bob Barry, spokesman for Iridium.
Castle Harlan withdrew its bid little more than a week after completing its due diligence, citing the satellite company’s limited potential to generate revenue.
“Although Iridium provides a magnificent international point-to-point telephone service, our due diligence and marketing studies were unable to confirm that Iridium would generate even low levels of revenue with a high degree of certainty,” Castle Harlan said in a statement.
Motorola Inc., Iridium’s primary financial supporter and 18-percent owner, said in U.S. bankruptcy court last Monday it would commence plans to de-orbit the 66-satellite constellation on Aug. 2.
“We are finalizing a schedule to decommission the satellite constellation. We hope to have the schedule in place as soon as possible, but there will be no decommissioning before next week (the week of Aug. 7),” said Scott Wyman, Motorola spokesman.
Motorola learned a hard lesson with Iridium, taking losses totaling approximately $2.5 billion. The company doesn’t plan on shying away from similar opportunities in the future. It will, however, “conservatively balance them against shareholders and the balance sheet,” Wyman said.
Iridium filed a motion at the end of May in U.S. Bankruptcy Court for the Southern District of New York to sell its assets to Castle Harlan. For Iridium, Castle Harlan’s retreat marks the end of any legitimate attempts to rescue the company from failure.
“Without any bidders, there is no point in us pushing forward in making the satellite system operational. There are other people who are still trying to put together a deal, but it’s very much a long shot,” Barry said.
Other suitors, including Venture Partners and IR Acquisition Group, have expressed interest in buying Iridium, once valued at $5 billion.
Venture Partners offered to pay $50 million for the company in June, and IR Acquisition Group submitted a proposal in May to buy Iridium for $61 million. Neither offer was seriously considered because Iridium said both companies had failed to prove they could provide the funding.
