A new venture backed by veteran airline executive Dan Colussy is reported to be buying the assets of Iridium L.L.C., Motorola Inc.’s financial drain and the center of controversy since it first began operation of its 66 low-earth-orbit satellites in 1998, for about $25 million.
Iridium Satellite L.L.C.’s existence has been confirmed, but it is not yet a fully functioning corporation. Colussy, whose past achievements include running Canadian Pacific Airlines and Pan American World Airlines, currently is the director of Baltimore-based Constellation Energy Group.
If Iridium Satellite purchases the assets, it will be saving the equipment from certain destruction. Motorola outlined a schedule to de-orbit the satellites at the end of August after no serious bidders came forward at a bankruptcy hearing around that time.
Several investment groups, companies and individuals have tried to buy Iridium’s assets after the network was shut down in April. The most serious of those bidders was New York merchant bank Castle Harlan Inc., which offered up $50 million in May, but withdrew its offer in August after completing due diligence.
At that time, Castle Harlan said Iridium-once valued at $5 billion-provided an excellent point-to-point service, but “our due diligence and marketing studies were unable to confirm that Iridium would generate even low levels of revenue with a high degree of certainty.”
There is speculation that Iridium Satellite will relaunch the satellites and serve those companies and industries most in need of satellite communications, including the maritime, aviation and adventure businesses. Plans to market satellite communication to the U.S. government and humanitarian groups could also be in the works.
Motorola lost nearly $2.5 billion trying to keep the company and its satellites in the air. Iridium Satellite’s possible purchase could exempt Motorola from any further responsibility.
Motorola said it believes a deal with the new firm will be concluded by the end of the month, at which time Motorola will cease all maintenance payments.
