VA: OrbComm, one of world's largest makers of satellite based networks, files for bankruptcy--problems with satellites cited : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

VA: OrbComm, one of world's largest makers of satellite based networks, files for bankruptcy--problems with satellites cited

Source: The Washington Times Publication date: 2000-09-16

Arrival time: 2000-09-17

Herndon-based Orbcomm Global LP, one of the world's largest makers of satellite-based networks, filed for Chapter 11 bankruptcy protection yesterday.

The subsidiary of Sterling, Va.-based Orbital Sciences Corp., had problems with its satellites, couldn't deliver its products on time and lost money during its second and into its third quarters, it said.

"In a nutshell, we had an interest payment of $12 million due by Aug. 15," Scott Webster, the company's chairman and chief executive officer, said yesterday. "Today is Sept. 15, the end of a 30-day graceperiod, and we haven't got the cash to pay it."

The company and its seven subsidiaries filed for Chapter 11 in U.S. Bankruptcy Court in Delaware, which will allow it to restructure and reorganize its business.

"We have resolved all of the customer hardware problems, but it kind of came too late," Mr. Webster said. Customers didn't receive orders from Orbcomm on time because there were problems with the devices, and the company ended up losing money, which meant it couldn't pay its bills.

In the meantime, Teleglobe Inc., a satellite-services company based in Canada and a co-owner of Orbcomm, is giving the company $17 million in financing.

"The credit has been weak for quite a while," said Greg Zappin of Standard & Poors, one of the nation's major bond-rating companies. "When they defaulted on their debt, we lowered the bond accordingly." S&P recently assigned the company a single "B minus" rating.

"That's a pretty significant event. Bankruptcy is a lengthy and costly process," Mr. Zappin said.

He said the company could come out of bankruptcy strong and profitable if Orbcomm needs only a restructuring and doesn't have deeper problems with its business.

"I'm confident we will emerge stronger and more focused and fully financed by the end of the year," Mr. Scott said.

"Unlike Iridium, Orbcomm has already demonstrated market demand and with modest growth and fulfillment of orders. We go a long way toward having all the subscribers needed to get to our break-even point," Mr. Webster said. He was referring to District-based Iridium LLC, a satellite phone company that went out of business at the beginning of the year after losing billions of dollars.

Publication date: 2000-09-16

-- Carl Jenkins (, September 17, 2000

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