[Satellite News 09-23-08] Iridium signed an agreement with GHL Acquisition Corp. Sept. 23 that will eliminate Iridium’s debt of about $131 million and allow the mobile satellite service provider to develop its next-generation satellite constellation, Iridium Next. 
    As part of its efforts to secure the financing needed to develop its next-generation satellite constellation, Iridium looked at multiple options, Iridium Vice President Don Thoma told Satellite News. After a nine-month assessment period, Iridium went with investment bank Greenhill and Co. and affiliate GHL to acquire Iridium and form Iridium Communications Inc.
    GHL’s stockholders will own about 55 percent of the new Iridium, while owners of current Iridium stock will receive about $77 million of cash and 36 million common shares in the new entity. The agreement does not rule out potential acquisitions in the future, Thoma said. “We will always look at opportunities associated with improving the position of Iridium and improving the capabilities of the services for our customers,” he said.
         In terms of financing Iridium’s next-generation satellite constellation, Tim Farrar, an industry analyst and principal of TMF Associates, said the GHL deal was not a make-or-break situation for Iridium. “It does not completely ensure the completion or success of the Iridium Next constellation, but it helps,” he said. “What this backing does do is provide a little bit more certainty for shareholders.”
    Prior to closing of the transaction, Iridium may make up to $15 million of further distributions to its existing shareholders. Greenhill, after investing about $23 million in Iridium convertible debt prior to completion of the transaction, will receive about 2.3 million common shares of the new company.
    Robert Niehaus, senior vice president of GHL, will become chairman of Iridium Communications. GHL also will name three directors to Iridium’s executive board — Scott Box, CEO of GHL Acquisition and two directors from Greenhill and Co. Five directors from Iridium will remain on the board, and Matt Desch will continue to serve as Iridium Communication’s CEO.
    GHL and Greenhill “will have oversight, and we welcome that,” said Thoma.
    Desch commented, “We are excited to partner with GHL Acquisition and Greenhill in this transaction. Greenhill has a long track record of value creation in the public equity markets, and we believe its commitment to Iridium will be extremely valuable as we continue to grow our business and look to deploy our next generation constellation. Not only will this transaction permit us to have a strong balance sheet and potential future funding from GHL Acquisition’s future warrant proceeds, but it will also provide us access to Greenhill’s expertise and network of relationships as we develop Iridium into the future. This transaction positions us well to meet and exceed the needs and expectations of our customers, suppliers, employees and stockholders.”
    Iridium Communications will apply for listing on the Nasdaq as a sponsored IPO. Completion of the transaction is subject to U.S. Federal Communications Commission approval.