Barring a last minute financial rescue, Iridium
LLC planned Friday to shut down its mobile phone service at
midnight and send its 66 satellites eventually crashing to earth.
The company told a U.S. bankruptcy court in a written filing
that it has been unable to find a qualified buyer and asked for
permission to use $8.3 million of its remaining money to close
down. The move would cut off service to 55,000 customers.
Iridium's filing came just hours before a scheduled hearing to
determine the future of the money-losing company, which has been
beset by anemic consumer demand and $4.4 billion in debts.
If the court approves spending the money, Washington-based
Iridium will pull the satellites out of orbit so they can burn up
on re-entry into the Earth's atmosphere.
Iridium's future began looking bleak two weeks ago when wireless
phone pioneer Craig McCaw scrapped plans to expand his budding
satellite empire with a bailout of the company.
The satellite network's shutdown would halt a long-running,
sometimes quixotic attempt to link up the remotest reaches of Earth
with powerful mobile phones.
Iridium filed for bankruptcy court protection from its creditors
last August, unable to make payments on its debts, but hoping to
reorganize and continue operating.
While Iridium has more than tripled its subscriber base since
last summer, the customer count was still well shy of the levels
needed to keep the company afloat without another cash infusion
from lead investor Motorola Corp. and its other hesitant backers.
The service, launched in late 1998, stumbled out of the starting
gate amid complaints about prohibitive prices as much as $3,000
per phone and up to $7 per minute for calls and large clunky
Prices for calls and the phones were cut sharply last summer,
but too late to restore customer confidence, especially with an
aggressive new rival named Globalstar introducing service in recent
Discussions with possible purchasers for Iridium had continued
through early Friday, but no big-name corporate saviors had come
forward. The only known bidder was Gene Curcio, owner of Los
Angeles-based Crescent Communications Inc., a privately held
Curcio had wanted Motorola to continue operating the satellites
for at least another two months. But Motorola, among the creators
of Iridium, has said it was unwilling to keep the satellite network
in operation past midnight.
In afternoon trading, shares of Motorola were down $2.12 1/2 at
$149.62 1/2 on the New York Stock Exchange.