NEW YORK-Citing “the weak state of the new issues public market,” Orbcomm Corp., Herndon, Va., announced July 2 it decided to postpone indefinitely its planned initial public offering of 7.6 million shares of stock at $15 to $18 each.
The corporate stakeholders of the low-earth-orbit data satellite start-up “decided that the available valuation placed on Orbcomm shares was below the true worth of Orbcomm business,” the company said.
Orbcomm Corp., incorporated in March, filed in April to go public so it could raise capital to repay Orbcomm Global L.P., which has financed the venture so far.
In its Securities and Exchange Commission registration document, Orbcomm said it expected $125 million in gross proceeds from the planned IPO, plus capital from an outstanding debt issue and earlier financial contributions by members of the limited partnership that owns it would provide the approximately $332 million it anticipates needing through the third quarter of 1999. By the end of last year, some $242 million of that amount had been spent.
In its IPO postponement announcement, Orbcomm did not say how it would make up this apparent capital shortfall or whether the IPO’s postponement would have any effect on its commercial service launch plans.
However, it said, “the company will continue to evaluate market conditions and may decide to offer its shares again in the future.”
The $332 million is needed to pay for a system of 36 LEO satellites and associated ground infrastructure, the company said in its IPO registration document. Orbcomm has provided limited commercial service in the United States via two LEOs since early 1996.
As of April 21, Orbcomm had launched a total of 12 LEO satellites and was anticipating the launch of 16 more by mid-year. As of July 2, the total launched satellites remained at 12, according to Devon Nagle, a spokesman for the company.
The money to have been raised by the initial stock sale was to be paid to the Orbcomm Global limited partnership. Partnership members, comprising corporate entities affiliated with Orbital Science Corp., had invested $180 million in the Orbcomm Global limited partnership as of Dec. 31 and include: Orbital Communications Corp., an American space and information systems manufacturer and service provider; Teleglobe Inc., a Canada-based international telecommunications carrier; and Teleglobe’s strategic partner, Technology Resources Industries Bhd., a Malaysia-based holding company that controls the largest cellular operator in Malaysia and has established cellular operations in Bangladesh, Cambodia and Tanzania.
