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Iridium files Chapter 11
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August 13, 1999: 5:52 p.m. ET
Motorola, its largest investor, says it will continue operational support
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NEW YORK (CNNfn) - Satellite communications firm Iridium LLC filed for Chapter 11 bankruptcy protection Friday as the troubled company seeks a major restructuring program to turn around its business.
The move comes just hours after a group of bondholders filed an involuntary bankruptcy petition against the cash-strapped firm. The bondholders filed their petition in U.S. Bankruptcy Court in New York; Iridium made its filing in Delaware.
Iridium (IRID) confirmed earlier this week that it had defaulted on $1.5 billion of its outstanding debt, leaving the company on the brink of insolvency.
"The action is the most efficient way to conclude Iridium's restructuring negotiations," said John Richardson, Iridium chief executive officer. "We are confident that Iridium will emerge from this process as a stronger and more vibrant company in the telecommunications marketplace."
Iridium service to its customers will not be affected.
The Schaumburg, Ill.-based company has experienced significant financial difficulties in the past 12 months, mostly because it's had difficulty gaining subscribers for its global telephone service.
Motorola Inc. (MOT), Iridium's largest investor, said it will continue "full operational support" for the company.
"Given the progress being made to date to restructure Iridium's capital structure, we are optimistic that a restructuring plan can be accomplished within 30 days," Motorola said.
The group of bondholders that filed its own bankruptcy petition hold about 25 percent of Iridium's $1.45 billion in outstanding senior notes.
The bondholder group did not have an immediate comment on Iridium's voluntary filing.
David Kuney, a bankruptcy lawyer with Womble, Carlyle, Sandridge & Rice in Washington, said Iridium would likely seek to transfer the entire bankruptcy proceeding to Delaware.
Iridium shares fell 1-3/16 to 3-1/16 before trading was halted on the Nasdaq stock exchange Friday afternoon.
-- from staff and wire reports
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Iridium
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