Motorola ordered to pay back Iridium loan

A New York federal judge this week ordered Motorola to pay $300 million to several lenders for its failed satellite venture Iridium.

Before Iridium filed for bankruptcy in 1999, it borrowed $800 million from Chase Manhattan and other investment banks. The loan was guaranteed up to $300 million by Motorola, but Motorola was not obligated to back up the guarantee under the protection of bankruptcy.

However, the Manhattan U.S. District Court Judge ruled Monday that Iridium officials misrepresented the company’s finances, subscriber base and the status of its rollout when the loan was made. Therefore, Iridium was deemed to have defaulted on the loan and, as Motorola signed off on the loan, the vendor is obligated to pay.

Motorola officials said in a statement the company has grounds for an appeal. If the ruling stands, however, it could provide ammunition to several Iridium investor lawsuits against Motorola

--Kevin Fitchard, staff writer