Iridium investors may get grim news this week, when the company will likely miss its revenue and subscriber targets -- just when a huge debt payment is coming due.
The beleaguered satellite phone company has already negotiated for more time to make payments on US$800 million in debt on two occasions. Under the latest agreement, the company has until 30 June to pay up or come up with an alternate plan. It has to make another large payment on 15 July.
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It looks like Iridium (IRID) will have to come up with a way to restructure its vast pile of debt, since it hasn't found a huge number of new customers or new sources of revenue. Its options are limited, analysts say.
Iridium's 66-satellite network, which lets users make and receive calls anywhere on Earth, cost about $5 billion. That means the company needs a huge influx of revenue just to break even.
If it doesn't come up with a restructuring plan that appeases its lenders, "bankruptcy is more than within the realm of possibilities," William Kidd, satellite analyst at investment bank C.E. Unterberg Towbin, said in a recent report.
Iridium executives say they don't intend to file for bankruptcy. Last week, the company unveiled a sweeping plan to cut prices and redirect its marketing efforts to focus on industrial customers. Executives admitted that the overhaul was sorely needed.
Iridium officials couldn't immediately be reached for comment.
In the first three months of the year, Iridium reported a loss of $505 million on revenue of a scant $1.45 million. Iridium is expected to disclose its second quarter results in July.
Investors aren't holding their breath. Iridium stock closed at $9.44 on Monday, down about 85 percent from a year ago.
