RESTON, Va.—Wireless data carrier Motient Corp. announced plans to restructure its debt under a Chapter 11 bankruptcy plan the company filed with the Eastern District of Virginia Bankruptcy Court, a move Motient said will eliminate more than $40 million in annual interest payments.
Motient said it would continue to provide two-way wireless data service to its more than 250,000 customers throughout the bankruptcy process. The company said it expects the restructuring to be comparatively simple and relatively quick. Motient said it hopes to emerge from bankruptcy by the spring of this year, and that it still expects to break even in earnings before interest, tax, depreciation and amortization sometime this year.
Under the restructuring deal, senior noteholders will exchange their notes for new Motient stock. Existing common shareholders will receive warrants to purchase 5 percent of the new common stock in the reorganized company.
The news is not necessarily surprising as Motient has been on the ropes for the past several months. The company’s earnings have been sluggish, it recently cut jobs, it canceled its merger with Rare Medium and it announced it was unable to pay the interest on its senior notes. The situation pushed Research In Motion Ltd., which sells BlackBerry wireless e-mail devices that run over Motient’s network, to cut Motient out of its revenue forecasts.
