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Foundering Iridium Attracts Some After-Hours Bidders

March 21, 2000|MICHAEL A. HILTZIK | TIMES STAFF WRITER

Like Costco shoppers smelling a bargain, three bidders for the failed satellite phone network Iridium emerged Monday.

But the company said it doubted they were serious candidates to take over the multibillion-dollar system.

The "constellation" of 66 satellites "is not an asset that you can bid $1 for, because it costs money to operate," said Robert Beury, an attorney for Washington-based Iridium.

Iridium, which was conceived by engineers at Motorola Corp. as a global mobile-phone network, was ordered into liquidation by a federal bankruptcy judge Friday, after it said no qualified bids for the system as a whole had appeared in time to meet a court-imposed deadline. That left Motorola to begin the months-long process of nudging the satellites out of their orbits and toward harmless incineration in the upper atmosphere.

On Monday, however, three small companies said they would pursue bids for the assets. They are HotJump, a Washington-based operator of a Web site that offers prizes and lotteries to users; Merit Studios, a Las Vegas company that claims to own a data-compression technology that would work well with Iridium's low-capacity satellites; and Venture Partners Inc., controlled by Rolling Hills businessman Gene Curcio, who hopes to use Iridium to provide cellular phone service in Latin America and elsewhere.

None has yet submitted an acceptable bid, Iridium said.

Some of the bidders may have an overly optimistic view of the system's capabilities or its likely price.

"The satellites are no problem," said Michael John, chief executive of Merit Studios. "I could get them tomorrow because they're worthless to everyone else."

Not so fast, Beury said. Motorola--which holds Federal Communications Commission licenses for the satellites' transmission band--and Iridium are obligated to sell the satellites only to buyers who demonstrate enough financial backing to keep the system safely operating. That means keeping them maintained in a way that will not interfere with other satellites or present a danger to persons on the ground.

Beury said the Iridium assets most likely to have value for buyers are not the satellites but the system's ground stations and a satellite operations center. He said the company will sell those assets piecemeal.

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