ICO Global Communications Ltd. received final commitments for the $1.2 billion in financing needed to finish building its satellite voice network from none other than cellular industry pioneer Craig McCaw.
ICO announced at the end of October it had received letters of intent for the first $225 million of an expected three-stage financing plan, but would not name the companies providing the funds. McCaw and his affiliated companies, Teledesic L.L.C. and Eagle River Investments L.L.C., are behind that money and the next two rounds of financing.
Under the agreement announced last week, the first $225 million in debtor-in-possession financing should be completed by Nov. 8. The second DiP financing round for $275 million is expected to be completed by the end of January. The final $700 million of exit financing will be provided upon confirmation and enactment of ICO’s restructuring plan, which will bring it out of Chapter 11 bankruptcy protection, expected by the second quarter. DiP financing will be converted into equity at that time, McCaw said.
While McCaw and his companies led the effort, he said others are invited to participate as well.
“It is our hope that by working with ICO’s team and international partners, we can bring the company back to good health and make a contribution to global communications, particularly in the developing world,” McCaw said.
“We realize that this is a big job and that there’s a lot of work ahead of us.”
The revelation of McCaw’s input caps weeks of speculation over what possible satellite investments the wireless trailblazer may make. In September, McCaw created a buzz by announcing he planned to explore possible early market strategies for his Teledesic venture by taking advantage of the Iridium L.L.C. and ICO bankruptcies.
“We have the time necessary to evaluate opportunities created by the unfortunate difficulties of others,” Bill Owens, Teledesic co-chief executive officer, said at the time. “Teledesic has decided to explore a variety of early-entry opportunities that will help us fulfill our long-term vision of delivering global, broadband communications services.”
The ICO and Iridium satellite networks are incompatible with the Teledesic “Internet in the Sky” venture, as the former are narrowband services while Teledesic is broadband. However, a fuller range of satellite-based services would allow McCaw to offer bundled satellite services that possibly could enhance what each could provide individually.
“Our investment in ICO marks the first step in our strategy to widen the technological tools at our disposal and serve a broader group of customers,” McCaw commented.
Without doubt, the investment comes as phenomenal news to MSS provider ICO.
“ICO’s future just got brighter,” said Richard Greco, ICO chief executive officer. “This financing agreement provides us with a clear path to exit from Chapter 11. Now we can move forward aggressively with our plans to complete our system and launch our global mobile voice and data services.”
McCaw reportedly is considering an additional investment in Iridium as well. The ICO investment is subject to the approval of U.S. Bankruptcy Court, the Bermuda and Cayman Island courts and other conditions.
