Irate Iridium Creditors Sue Motorola

Includes: BDH, GOOG
by: Abbi Adest

Excerpt from our One-Page WSJ Summary:

Motorola May Find Itself on the Hook For Debt of Failed Venture Iridium

Summary: Creditors of the failed satellite telecom company Iridium LLC are suing its former parent company Motorola for $3.7 billion plus interest. The plaintiffs claim that rather than building a going concern, Motorola developed a scheme to charge billions for contracts to construct and service a satellite network without taking on the risks of investment. At the heart of the matter is why Motorola charged Iridium $5 billion to build a satellite telecom system worth a fraction of the price, and did so when Iridium had already declared bankruptcy. Motorola's counsel responded in court filings in February that, "At bottom, the... claims are not based on facts, but on a wish to rescind what turned out to be an unprofitable investment." Recently, some hedge funds have been purchasing Iridium bonds, convinced that Motorola will either come to an outside agreement with the creditors or lose in court.
Related links: Full WSJ articleAnalysts Remain Bullish on MotorolaMotorola Has Really Turned Itself AroundAnalysts Applaud Motorola's Buyout of Symbol • Conference Call transcript: Motorola Q2-06
Potentially impacted stocks and ETFs: Broadband HOLDRS (NYSE:BDH) has an almost-20% weighting in Motorola.

Seeking Alpha's One-Page Annotated Wall Street Journal Summary summarizes all the major stock-related articles in today's WSJ. Receive it by email every morning (free/no spam). Sign up here.

Comment on this article

Seeking Alpha is not affiliated with The Wall St. Journal.