Orbcomm Chairman Remains Passionate About Financially Ailing Company
While the rest of the satellite industry is bracing itself for another potential high-profile disaster, this time on the Little LEO side of the fence, Orbital Communications Corp. (Orbcomm) execs are keeping a positive outlook on the future.
And given the events of the recent past, maintaining a positive outlook is a challenge in and of itself.
The company has faced two blows that bring into question its ability to continue on: two large rounds of employee layoffs and the more serious sign of defaulted debt payments.
Adding to the company’s troubles is the lack of aid of its parent companies, Teleglobe Inc. [TGE] and Orbital Sciences Corp. [ORB]. Financially ailing Teleglobe will add the $17 million to Orbcomm that it committed to on Aug. 4 but has no plans to infuse any more financing beyond that. BCE Inc. [BCE], a proposed suitor to Teleglobe, said it would not finance Orbcomm if it succeeded in acquiring Teleglobe.
…No Lack Of Faith At The Top
However, the string of financial setbacks has not weakened the commitment of Orbital SciencesChairman and CEO David Thompson to the venture.
“First, Orbcomm is making considerable progress in implementing the new business plan it has developed, which is sharply focused, for the next two years, on its top 30 or 40 corporate customers supported by its key VARs, international affiliates, equipment suppliers and other business partners,” Thompson said.
“Second, Orbcomm has continued to provide high-quality data communications services to all its existing customers and international service providers, using its space and ground network which is performing superbly. The recent statistics on message throughput reliability and response times are pretty amazing, well above Orbcomm’s target levels.
“Third, after the staff reductions earlier in the summer, Orbcomm’s organization has stabilized and its people are today fully determined to make the business a success.
“And, fourth, over the past few weeks, Orbcomm has made some important progress in restructuring its finances, but there is still a lot more work to do over the next several months to address Orbcomm’s overall capital needs in a complete manner. Although substantial uncertainties lie ahead during the coming months, I believe Orbcomm ultimately will be successful,” said Thompson.
Orbcomm earlier this month engaged Donaldson, Lufkin & Jenrette Securities Corp. [DLJ] to act as its financial advisor. Under the terms of the engagement, DLJ will, among other things, assist Orbcomm in exploring recapitalization alternatives for its $170 million 14 percent senior notes due 2004.
Orbcomm is following its previously announced revised sales and marketing strategy to focus on its top-tier customers in a number of key industries.
The new strategy was adopted for the low-Earth-orbit satellite data system due to lower-than-expected subscriber ramp-up and revenues. Distribution will be funneled through value-added resellers and other partners, rather than through the company’s direct and indirect sales channels.
Orbital Sciences is a co-founder of Orbcomm’s satellite-based messaging service, but previously reduced its stake to roughly one-third by selling part of its interest to Montreal’s Teleglobe.