Investment bank DLJ will be charged with helping Iridium "in evaluating and reviewing alternatives to restructure its indebtedness and reduce financing costs, in light of lower than expected subscriber ramp-up and revenue generation," the company said in a statement yesterday.
Iridium also said it does not expect to meet certain subscriber goals by the end of the month as required by its lenders, including having at least 27,000 subscribers for its high-tech phone service.
Shares in the company fell more than 28 percent to 10.4375 in late afternoon trading today following yesterday's news, a new 52-week low for the stock. Shares have traded as low as 12.625 and as high as 62.375 in the past 52 weeks. The stock traded in the low 30s as recently as February.
The admission is the latest in a string of setbacks for the high-flying company.
Iridium, which offers mobile phone service anywhere on Earth via a $5 billion, 66-satellite network, said in March that it would not meet subscriber and revenue targets set by creditors as conditions of its loans. Iridium was later granted a two-month waiver under its $800 million senior secured credit facility, giving it until May 31 to reach certain revenue and subscriber goals. The company said it had 10,294 subscribers at the end of March.
In addition to posting huge quarterly losses, Iridium has seen its chief executive and chief financial officer resign, yet the firm filled the vacant CFO post yesterday. The stock is trading near all-time lows and the company has been hit with a slew of class action lawsuits in recent weeks.
"It's been a lot more difficult than anyone thought," said Antonette Goroch, an analyst at The Carmel Group, a satellite and communications industry consulting firm. "They got their satellites up there, but then they've just had problem after problem."
Separately, former CEO Ed Staiano sold nearly 75,000 Iridium shares worth about $1.1 million shortly after leaving the company in April, according to a Bloomberg report.
Bloomberg contributed to this report.