Iridium Syndicates $800m Loan

Iridium LLC has raised $800 million (Rs 2,880 crore) through private placement of two-tranche debt. Iridium is a Motorola-led 66 low earth satellite global mobile personal communications system which is expected to offer commercial service by end-1998.

Structured on a tenor of eight years, the bonds were placed in two tranches of $300 million (Rs 1,080 crore) and $500 million (Rs 1,800 crore). The $300 million instalment includes paper with a 13.5 per cent yield and equity warrants.

The warrants allow bond-holders to purchase 1.56 million shares in Iridium World Communications Ltd, the publicly listed (on Nasdaq) member of Iridium LLC.

 

The $500 million debt portion has been issued with a 14 per cent interest to yield 15 per cent. With this additional financing, Iridium LLC has completed its anticipated funding needs until commercial service is started, raising a total of $4.72 billion (Rs 16,974 crore) to fund the ongoing infrastructure buildout and commercialisation of the system, according to an Iridium press release.

Since May, Iridium completed a $240 million (Rs 864 crore) initial public offering of Iridium World Communications Ltd on Nasdaq and received a $750 million (Rs 2,700 crore) loan commitment from Chase Manhattan and BZW. It also roped in a new investor, PT Bakerie Communications Corporation of Indonesia.

The satellite consortium is made up of 17 investing companies. One of them, Iridium India, a joint venture between a consortium of Indian financial institutions FI) and Motorola. The Indian company has invested $70 million (Rs 252 crore) in Iridium LLC, the operating company of the project.

The Indian FIs consortium is led by Industrial Development Bank of India and includes Infrastructure Leasing & Financial Services, Exim Bank, State Bank of India, ICICI, General Insurance Corporation, Housing Development Finance Corporation, IL&FS Venture Fund, Life Insurance Corporation, SCICI and Unit Trust of India.

International telephony provider Videsh Sanchar Nigam Ltd has a contract to set up and maintain gateway exchanges and earth-stations in India.

Apart from Iridium India, other owner-organisations of Iridium LLC include: Iridium Africa, Iridium Canada, Iridium China (Hong Kong), Iridium Middle East, Iridium SudAmercia, Khrunichev State Research and Production Space Center of the Russian Federation, Korea Mobile Telecommunications, the US Lockheed Martin Corporation, Raytheon, Motorola, Sprint, Nippon Iridium, o.tel.o.communications GmbH of Germany, Pacific Electric Wire & Cable Co of Taiwan, STET group of Italy and Thai Satellite Telecommunications Co.

To date, Iridium LLC has launched 17 satellites into orbit. Another 49 satellites of the GMPCS expected to be deployed in six circular polar orbits (of 11 operational satellites per plane) are scheduled to be launched over a period into early-1998.

Iridium LLC has a $3.45 billion (Rs 12,420 crore) contract with Motorola to manufacture, launch and operate the Iridium satellite network, as well as to construct various ground control facilities to manage the orbiting satellite constellation.

In addition, it has executed a $2.88 billion (Rs 10,368 crore) follow-on operations and maintenance contract with Motorola for ongoing maintenance of the Iridium network, including additional satellite manufacture and launches for replenishment of the satellite constellation up to 2002.