MSV Asks for Waiver of 2008 Satellite Payments

Paris
—


SkyTerra Corp.’s Mobile Satellite Ventures L.P. (MSV), running short of cash, has opened negotiations with Boeing in an attempt to get the satellite manufacturer to waive payments due in 2008 to give MSV time to arrange other financing, SkyTerra Corp. officials said Nov. 14.

The company




also is delaying or canceling some of the field trials of its service to save cash, and continues to seek a strategic partner that would provide financing before its




cash runs out next June.

Reston, Va.-based MSV is building two large L-band satellites to provide fixed and mobile communications in North America using a hybrid satellite-terrestrial network.

SkyTerra
/MSV is one of several companies planning next-generation mobile satellite networks that are looking to partner with a direct-broadcast television




provider or a wireless telephone service




operator. SkyTerra/MSV has secured U.S. regulatory approval to use its satellite spectrum on the ground as well, without having to pay for the spectrum through an auction.

The value of the spectrum is the core asset of SkyTerra/MSV. Judging from the company’s stock price, the market value of the spectrum has slipped in recent months as neither SkyTerra/MSV nor any




other mobile satellite services provider has announced a partnership with an operator able to finance deployment of the ground network.

In a Nov. 14 conference call with investors, SkyTerra/MSV Chief Executive Alexander H. Good and Chief Financial Officer Scott MacLeod said they were leaving no stone unturned in an attempt to raise cash and cut expenses to avoid a mid-2008 financial crisis.

As of Sept. 30, the company had $275.2 million in cash and cash equivalents. It will need to raise an additional $125 million to $150 million, at current cash-burn levels, to continue operations through the end of 2008.

Boeing Satellite Systems International of El Segundo, Calif., is building




MSV’s satellites, to be launched in 2009 and 2010.

According to SkyTerra filings with the U.S. Securities and Exchange Commission, the company will owe Boeing $228.4 million between late




2007 and the end of 2008.

To provide financial breathing room, Good and MacLeod said the company




will ask its contractors




to waive at least some payments due in 2008 to 2009 or beyond. While this likely would end up adding to the total cost of the contract, it would give MSV




additional time to secure a strategic partner.

Good said he remained hopeful that a U.S. government auction of radio spectrum scheduled to start in January and




end in March will focus the attention of current and prospective wireless network operators on the value of SkyTerra/MSV’s spectrum asset.

SkyTerra/MSV




also is seeking to sell its 11.1 percent shareholding in TerreStar Corp., a former sister company now planning a




competing satellite network




in S-band.

TerreStar’s
stock, like SkyTerra’s, has dropped sharply this year. MacLeod said SkyTerra/MSV has written down the value of its TerreStar stock holding, which it now estimates is worth $90 million.