RESTON, Virginia, United States—Struggling messaging carrier Motient announced it will cut its work force by 25 percent, will not pay US$20 million in interest payments and is terminating its proposed merger with software company Rare Medium.
The moves are perhaps the worst news to come from Motient, which has been struggling all year with slow sales in a tightening economy. Many analysts saw Rare Medium as a needed source of cash for Motient.
In a statement, Motient’s chief executive officer (CEO) said the company is still hoping to break even by the middle of next year.
“Even though our core business revenue and subscriber base have continued to rise throughout these difficult times, we needed to take all prudent actions necessary to ensure our success in achieving this goal,” said Walter V. Purnell Jr.
Motient said it will hire a financial adviser to assist it in a possible restructuring of its senior notes. The company also said it is canceling plans for a 1-for-10 reverse stock split. Rare Medium’s US$50 million loan to Motient was extended to 8 October.
