Iridium Completes Stunning Turnaround

Iridium Satellite Communications, the satellite phone company that went belly-up soon after going live, filing for Chapter 11 Bankruptcy in 1999 has just completed a stunning turn around by ordering 81 spacecraft to upgrade its global network according to the June 2nd, 2010 BBC News article "Huge order for Iridium spacecraft."



According to the article:

Thales Alenia Space (TAS) of France will build the satellites - 66 to form the operational constellation, the remainder to act as spares. The order makes the Iridium Next venture the biggest commercial space project in the world today..

The overall cost of the project, dubbed Iridium Next is likely to be about $2.9 billion USD, much of which the company expects to finance out of its own cash flow.

Based in McLean, Virginia, with about 360,000 subscribers worldwide, Iridium has earning revenues amounting to hundreds of millions of dollars with just under a quarter of those revenues deriving from US government and Department of Defense contracts.

But all that ongoing domestic revenue makes it even more surprising that TAS has beaten out Lockheed Martin for the contract. According to the follow-up June 3rd, 2010 BBC News article "The magic touch of French satellite finance" the secret has to do with the role played by the Compagnie Francaise d'Assurance pour le Commerce Exterieur (Coface) which "underwrites risk and has been particularly active in supporting the French satellite manufacturing sector."

The article goes on to state:

Its (the Coface) commitment to projects like Iridium Next allows those projects to secure loans at very favourable rates. In what are tough economic times, Coface support has facilitated ventures that might otherwise not have been able to get financing.

Coface is also underwriting another deal for TAS to build satellites for Iridium competitor Globalstar, which operates 48 spacecraft in a slightly higher orbit and will see its first next-generation spacecraft launch later this year.

Canadian banks and Canadian politicians looking to grow Canadian  space focused business might want to take close note of this interesting turn of events.