NEW YORK-Iridium World Communications Ltd., which plans to launch a satellite-based global telephone and paging service, went public June 10, raising $240 million in an offering of 12 million shares of Class A common stock at $20 per share.
Iridium plans to begin offering service in September 1998. The consortium, which expects to have launched 10 low-earth-orbit satellites by the end of this month, must have all 66 of its planned satellites in service before it can go into commercial operation, said Robert Kaimowitz, senior analyst for Unterberg Harris, New York.
The system will cost about $5 billion to build, he said. Prior to going public, Iridium had raised $1.9 billion in private equity from its partners and another $750 million in bank credit.
The initial public offering, lead managed by Merrill Lynch & Co., New York, was oversubscribed. Consequently, the issuer, which had planned a 10 million share IPO, increased its initial offering by 2 million shares. Actual share prices were in the $19 to $21 range envisioned when the company registered the proposed IPO with the Securities and Exchange Commission in March.
Iridium World, Washington, D.C., is the funding body for Iridium L.L.C., a Hamilton, Bermuda-based subsidiary of Motorola Inc., which formed the satellite telecommunications consortium in 1987. Proceeds of the sale will be used to purchase Class One membership interests in Iridium L.L.C. In turn, proceeds of the sale of these membership interests will be used to make milestone payments under the space system and terrestrial development contracts and for other general corporate purposes.
Motorola, which owned about 25 percent of Iridium prior to the IPO, will receive most of the proceeds of the stock sale to repay services rendered.
After the IPO closes, Motorola and Nippon Telegraph and Telephone Co. will be the two largest partners, each with 15 percent.
Wireless telecommunications operators around the world that have ownership stakes in Iridium will market its service and manage customer relationships in their respective territories.
