Bankruptcies

On 13 August 1999, having defaulted on some $1.5 billion in loans, Iridium filed for Chapter Eleven protection to give Motorola, the majority shareholder, time to restructure the company.85 Iridium's difficulties raised doubts over the viability of its rivals, and on 27 August 1999, having failed to raise $600 million to clear its debts, ICO followed suit. The $3.1 billion that ICO had previously raised had fallen $1.6 billion short of its overall requirements. Hughes Space and Communications, which was building the satellites for ICO, stood to lose $300 million if it collapsed. The launch vehicle companies were also exposed, but the risk was spread out because the satellites were booked on Delta, Atlas, Proton and Sea Launch. Despite the crisis, the mood was optimistic that ICO would be rescued.86^7 In contrast, GlobalStar started commercial service on 10 October 1999.88 It promptly began to market itself aggressively in an effort to turn in a quarterly profit by late 2000 or early 2001.89 The $216 million loss in the first quarter of 2000 was of little concern, because the company was not as exposed as ICO, and was certainly not in the position of Iridium, which had folded after consuming $5 billion.90 However, one of the GlobalStar satellites had already failed, so on 8 February 2000 a Delta II added four in-orbit spares, one of which was immediately made operational.91 The launcher industry was hoping that GlobalStar's operations would inject sufficient confidence to the market to enable both Iridium and ICO to survive restructuring. However, by the end of 2000 GlobalStar was experiencing difficulty in signing up clients.92 The basic problem was that the cellular telephone market had failed to expand at the predicted rate, at least not in terms of using satellites to provide global coverage.93 Meanwhile, on 13 January 2000 Boeing bought Hughes Space and Communications for $3.75 billion, renaming it Boeing Satellite Systems.94

Preparing the ICO F1 satellite.

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