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Iridium to Pull Plug on Satellite Service if No Bids Made

March 15, 2000

Iridium, the operator of the first global satellite-telephone network, will begin to shut down operations unless a bidder for the company's assets steps forward at a bankruptcy court hearing today. Motorola Inc., which founded the $7-billion project in 1990, plans to turn off the company's 66 satellites and discontinue the service this week. Iridium estimated that it would take six to seven months to pull down the satellites. Iridium filed for Chapter 11 bankruptcy protection in August after failing to attract enough subscribers. Analysts blamed the company's bulky phones, which cost as much as $3,000 and didn't work well in buildings and cars. The company was trying to market the service as prices for cellular phones and service were dropping dramatically.

"I don't think Iridium will be saved" said Victor Consoli, a money manager with Intrepid Management, which owns Iridium bonds. Iridium's bondholders have threatened to sue Motorola, alleging that the company extracted more than $1 billion from Iridium after it became insolvent. The company's 14% notes due in 2005 are trading at about 2 cents on the dollar, traders said. The company has said its common shares are likely worthless.

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