Magazine article American Banker

Chase: Satellite Phone Firm in Default on $800M Loan

Magazine article American Banker

Chase: Satellite Phone Firm in Default on $800M Loan

Article excerpt

Chase Manhattan Corp. has told Iridium LLC that its $800 million syndicated loan is in default, according to a federal filing made Tuesday by the satellite phone company.

In a July 29 letter to Motorola Inc., Iridium's largest shareholder, Chase asserted that a "triggering" event occurred under the credit agreement, which resulted in an "event of default." The filing does not say what the "triggering" event was.

The decision by Chase and other lenders in the syndication group effectively ends a four-month period in which Iridium was granted multiple postponements in repayment of the loan.

Chase, Barclays Bank PLC, and others in the syndicate did not declare the loans to Iridium in default during that time, even though the company was unable to meet its repayment schedule.

Now that Chase and the lender group will no longer extend that forbearance, a new conflict has developed, according to a filing by Iridium with the Securities and Exchange Commission.

Chase said that because of the triggering event, Iridium is required to demand that Motorola guarantee $300 million of Iridium's borrowings under the facility, and that Iridium has failed to make such a demand on a timely basis.

Iridium disputes that claim, saying this is "an apparent attempt (by Chase) to preserve a position."

Iridium also said that both it and Motorola believe that no "triggering" event has occurred, and that therefore Iridium was under no obligation to demand a guarantee from Motorola. …

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