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Chandra, McCaw tie up to revive ICO Globalnews
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05 December 1999

ICOsatellite01.jpg (3594 bytes)

They were rival bidders earlier -- India's Subhash Chandra, and America's Craig McCaw. With their surprise announcement of 4 December 1999, they are now partners in an attempt to acquire global mobile satellite communications company ICO Global, for which they had made rival bids earlier. The target company is in the bankruptcy court, and will need an injection of an estimated $1.2 billion to be revived.

Mr Chandra's Zee group, which owns the largest Indian-owned cable TV network, will collaborate with Mr McCaw's Bellevue, Washington, based Teledesic to turn ICO Global around. The Wilmington, Delaware, court which has been trying the ICO Global bankruptcy case, has initiated the financial arrangement under which the two acquirers will come together to lead the revival plan. The court has given its approval for a $500-million revival package.

Mr McCaw will bring in 62 per cent of the funds required through lead financing, and Mr Chandra will provide the balance 38 per cent as equity to enable ICO Global to come out of its bankruptcy proceedings. The McCaw-Chandra alliance will receive 74 per cent of ICO's restructured equity. The balance 26 per cent will be distributed among the company's creditors and its current shareholders.

Mr Chandra is expected to route his funds for ICO through his Indian satellite company, Asian Satellite Communications, which itself is into an ambitious $140 million satellite programme of its own -- the Agrani project. He is understood to be raising his portion of the package worth $190 million through a consortium of India-based investors, including bankers, heads of financial institutions and fund managers.

Mr Chandra had earlier bid for 74 per cent of ICO Global's equity for $1.2 billion while Mr McCaw had bid for 80 per cent for the same amount. There were reports that Mr McCaw's offer would be accepted.

On 31 October, Mr McCaw and his companies, Teledesic, and Eagle River Investments, had reached an agreement in the bankruptcy court that they would lead a group of existing ICO investors to provide a $225 million interim debt financing that will be converted into equity once the company comes out of the bankruptcy proceedings. This would have been followed by a $275-million second package. The court had approved a $150-million interim financing package from Mr McCaw and his associates. It has now approved the balance of the first phase as well as the second phase. Mr McCaw and his affiliates are also to bring in $700 million for exit financing and the company's creditors and shareholders are entitled to participate in this portion of investment.

ICO Global has told the court that a $1.2-billion infusion would enable it to restructure its operations and provide for the launch of its satellite services in time. With the recast plan now in place, the company is expected to file a plan of reorganisation by 15 January 2000 and exit bankruptcy proceedings sometime later.

ICO chief executive officer Richard Greco says the two entrepreneurs "share a common vision of the benefits that ICO can bring to the world". He believes that the McCaw and Chandra groups will strengthen the ICO effort "in their respective parts of the world".

Teledesic is a satellite venture building a global broadband Internet-in-the-sky satellite communications network. Besides Mr McCaw, who is chairman and co-chief executive, Microsoft chairman Bill Gates, Saudi prince Al Waleed bin Taal , Motorola, and the Boeing Company are investors in the firm.

Subhash Chandra is chairman of a diversified Indian group with interests in rice exports, packaging, and theme parks, besides media and entertainment. His Zee Telefilms Ltd is India's leading private producer and multi-channel broadcaster of television programmes with reach extending from India to the whole of Asia, major parts of Africa and Europe and even the US. Mr Chandra is also chairman of ASC Enterprises Ltd, a satellite communications company that is planning to develop and launch Agrani, a regional multi-mission geo-stationary satellite system.

The $2-billion Zee group has several broadcasting and cable companies in its fold. His Zee TV was launched in 1995 in collaboration with Rupert Murdoch's News Corp.The joint venture split up earlier this year, with Mr Chandra buying out News Corp's stake in the Hong Kong-based holding company, Asia Today.

also see : List of basic and cellular telephone operators in India

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Chandra, McCaw tie up to revive ICO Global