Skyterra Communications Inc. announced Sept. 22 it plans to separate into two publicly owned companies by early 2006, with a group of companies led by Motient Corp. set to acquire one of the new entities.

A unit dubbed Skyterra would solely hold Skyterra Communication’s stake in Mobile Satellite Ventures LP (MSV) and Terrestar Networks Inc. A newly formed unnamed entity would own all of Skyterra Communication’s other assets, including its managing interest in Hughes Network Systems LLC. The proposed separation would be accomplished by a special dividend distribution of shares of the new entity to Skyterra Communication’s shareholders on a date to be determined.

Skyterra Communications also announced that it executed a non-binding letter of intent with Motient and TMI Communications & Co., among others, that would result in the consolidation of the ownership of MSV and Terrestar into Motient. This consolidation would include the merger of the new Skyterra, following the special dividend distribution, into Motient in a tax-free, stock-for-stock merger.

“We believe that the separation of our interests in MSV and Terrestar from our interests in HNS and our other businesses, and the subsequent consolidation of ownership of MSV and Terrestar into Motient will help maximize shareholder value by enhancing the ability of each of these businesses to separately access the capital markets and execute their respective business plans,” Skyterra Communications President and CEO Jeffrey Leddy said in a statement.