Motorola Makes Offer to Boost Iridium Stake

Motorola Inc. offered last week to put $400 million more into cash-strapped Iridium if bondholders agree to swap $1.5 billion in debt for a 25% stake in the global satellite-phone company, said investors familiar with the plan. Motorola’s proposal, made to a group that owns two-thirds of Iridium’s bonds, calls for the cellular-phone maker to increase its stake in Iridium to 40% from 18%, the investors said. Motorola, which has written off at least $126 million of its $2.2 billion in financial guarantees to Iridium, declined to comment. Iridium spokeswoman Michelle Lyle said the information about Motorola’s proposal is “inaccurate,” but declined to elaborate. The bondholders include Alliance Capital Management and Conseco Capital Management, according to one investor. Those companies couldn’t immediately be reached for comment. The Motorola proposal would give Iridium enough money to stay afloat and help it avoid a court-imposed reorganization that could take years to resolve. Shareholders of Iridium World Communications Ltd., the publicly traded arm of Iridium, would see their 14% stake in the parent company shrink to almost zero, the investors said. Shares of Iridium World, which closed up 6 cents at $6.31 on Nasdaq, have fallen almost 90% in the last 12 months. Motorola shares closed up $4.38 at $92.50 on the NYSE.