After a long, torturous period of being kept on life support, it seems that the time has finally come for the plug to be pulled on Iridium LLC and to let the satellite constellation finally rest in peace.

The bankrupt satellite telephone service provider’s latest would-be savior, Castle Harlan Inc., bowed out last week. The New York-based merchant bank had been eyeing the global satellite communication systems and offered to purchase the assets at a bargain-basement price of $50 million.

But even with the deep discount, there were other financial considerations, mainly low revenue generation, that may have soured Castle Harlan from proceeding with its intent to purchase.

“Although Iridium provides a magnificent international point-to-point telephone service, our due diligence and marketing studies were unable to confirm that Iridium would generate even low levels of revenue with a high degree of certainty,” Castle Harlan officials said. “The result is that we must conclude that it would be economically inadvisable to move forward with the acquisition of the company’s assets.”

…Too Many Other Costs

While Castle Harlan did not identify any upcoming costs in its withdrawing from the acquisition proceedings, the replacement costs for the satellite constellation was likely a determining factor.

Roger Rusch, president of satellite consultancy TelAstra Inc., estimated that it would cost a staggering $300 million per year to replenish the 66 birds and millions of dollars in monthly operating expenses to maintain the business.

And with the difficulty that Iridium had in getting subscribers, as well as the troubles that its only operational competitor, Globalstar L.P. [GSTRF] is having, it should not be surprising that Castle Harlan backed away.

The equity for the acquisition was to have been provided by Castle Harlan Partners III, a $630 million private equity investment fund managed by Castle Harlan. Castle Harlan was formed in 1987 by John Castle, former president and CEO of Donaldson, Lufkin & Jenrette, and Leonard Harlan, founder and former chairman of The Harlan Co., a real estate investment and advisory firm.