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McCaw offers to invest $75 million in struggling Iridium

Beleaguered satellite phone company Iridium could receive nearly $75 million in interim funding from a group of investors led by cellular pioneer and billionaire Craig McCaw.

    Beleaguered satellite phone company Iridium could receive nearly $75 million in interim funding from a group of investors led by cellular pioneer and billionaire Craig McCaw.

    McCaw's group has agreed to provide $74.6 million in financing--called debtor-in-possession financing--which will allow the economically strapped Iridium to continue operating beyond Feb. 15, when a previous round of short-term funding will dry up.

    A federal bankruptcy court in New York still must authorize the proposed interim funding from McCaw. If approved, the new round will allow Iridium to operate through June 15.

    Iridium, the world's first satellite phone company, filed for bankruptcy protection last year after limited demand for its bulky phones and costly service hurt the company's balance sheet.

    Iridium's chief investor, communications giant Motorola, had vowed not to continue pouring money into Iridium unless other significant backers were brought on board. McCaw reportedly was considering a $600 million stake in Iridium, but apparently instead opted for a short-term-financing arrangement for now.

    Motorola indicated in a statement that it would gain an equity stake in a newly formed company as a result of the plan.

    "Today, Iridium filed in U.S. Bankruptcy Court a motion for approval of an interim financing plan that is intended to enable the parties to reach agreement on a long-term financial-restructuring plan, as well as meet Motorola's requirements of a sound business plan," Motorola said.

    Motorola said its involvement in the Iridium restructuring is not expected to impact its earnings.

    The move also may allow McCaw time to consider buying Iridium's assets and gives the company time to complete a possible restructuring plan, according to the companies.

    Analysts say McCaw, who claims investments in satellite Internet provider Teledesic, wireless carrier Nextel and fiber-optic network builder Nextlink through his Eagle River holding company, hopes to gain control of the satellite assets for a bargain.

    Similarly, the wealthy McCaw has agreed to invest $1.2 billion in Iridium competitor ICO Global Communications. A judge has yet to approve that deal, according to Eagle River executives.