The company also received an extension after failing to meet revenue and subscriber goals set by its creditors.
Iridium shares fell 1.6875, or 7 percent, to 19.9375 on the day. Stock has traded as low as 18.6875, yet as high as 72.1875, in the past 52 weeks. The company's stock has gradually slipped since the company's credit concerns first surfaced in mid-February.
The first company to offer worldwide satellite phone service, Iridium has suffered a series of financial setbacks this year. Poor marketing efforts and production problems have plagued the company, and analysts now say subscriber projections are way out of reach for the struggling firm.
Financial chief Roy Grant announced his plans to resign by April 16, the company said. Grant resigned for "personal reasons," but Iridium said it expects to name a replacement before his departure.
The company has posted large quarterly losses and ended last year with only 3,000 subscribers despite plans to have as many as 600,000 subscribers by the end of 1999.
Analysts say those numbers are too high. "If they can get half that it would be a good accomplishment," said Sean Badding, a senior analyst at The Carmel Group, a satellite and video consulting firm.
"This [executive resignation] is certainly not a positive sign. They've had delay after delay and the stock plunged...there's too many things that have happened to Iridium to make me feel good about the company," Badding added.
Iridium's 66-satellite system was the first network capable of connecting a phone call through its mobile satellite handsets anywhere on Earth. The company has an early-to-market advantage, but will soon face competition from Globalstar, a similar service slated to launch later this year.
Revised credit arrangements
Iridium received a 60-day waiver today from lenders under its $800 million senior secured credit facility. The company will now have until May 31 to reach certain revenue and subscriber goals.
The company would have defaulted on its bank lending agreements without the time extension. Iridium also said it has notified bank lenders that it is in the process of revising its subscriber expectations and will seek to modify its performance goals with creditors as a result.
But analysts said the company's creditors, which have already contributed significantly to the $5 billion project, want to see the service succeed.
"They're going to have a willingness to deal because of how much they've put up," Badding said.
Analysts say although the company has proved itself successful in launching its complex worldwide satellite network, switching gears to market its unique service has been more of a challenge than anticipated.
"They're simply having problems with their distribution and marketing systems, and if [those are] the problems they're fixable," said Steve Blum, president of Tellus Venture Associates, a satellite communications consulting firm.
Marketing the service
Selling the phones--which are more expensive, and twice the size of standard analog and digital cellular phones--has been a difficult task, and one that the company may have underestimated, analysts said.
But if performance numbers are off by a few months, there's little reason for concern, Blum said. The company, however, may have set overly ambitious and speculative subscriber and revenue targets, he added.
"That's what's going to be telling, is if they meet these goals in a couple months," he said. "If not, then I think you could say the problem is with the basic service concept, and you can't fix that."
Following production and roll-out delays, the company, which is initially targeting large multinational corporations and government agencies, was forced last year to put a multimillion-dollar advertising campaign on hold.
"Retail and marketing have been their Achilles' heel," Carmel Group's Badding said. "Bottom line: Iridium dropped the ball. They should have been doing these things 12 months ago and they realize this and they're trying to correct that."