Wireless service provider Motient
Thursday filed for 11 bankruptcy protection, becoming the latest in a series of wireless providers to face financial difficulty.
Motient said that it has negotiated a debt restructuring plan that will convert its senior notes to equity, a process that the company claimed will eliminate more than $40 million in interest payments per year.
Motient is a provider of two-way wireless messaging services. The company claims that, if the debt restructuring proceeds as it wants, it should reach financial break-even in 2002.
“This restructuring allows Motient to proactively eliminate substantially all of its debt and to significantly improve our ability to achieve EBITDA break even later this year,” said Walter V. Purnell, Jr., the company’s president and CEO.
Purnell said that the plan also would enable the company to continue providing uninterrupted service to its more than 250,000 subscribers. He said that holders of more than half of the principal value of the senior notes have agreed, in principal, to the restructuring.
Under the agreement, note holders who agree to do so will exchange their senior notes for new Motient stock. Motient has filed for Chapter 11 protection in the Eastern District of Virginia and the debt restructuring plan is subject to court approval.
Separate, the Nasdaq Stock Market said it had halted trading of Motient’s stock until the company satisfied Nasdaq’s request for additional information.
Last month, Arch Wireless filed for Chapter 11 protection and wireless Internet service provider (W-ISP) OmniSky sold its assets to EarthLink. Motient’s network provides access to e-mail and other data for users of Research In Motion BlackBerry devices and recently released a modem to provide the same service for users of Palm V series handhelds. It offers coverage in all 50 states.
Dave Haskin is managing editor of allnetdevices.com.