Orbcomm Settles Defective Satellite Claim for $44.25M

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PARIS — Satellite two-way messaging service provider Orbcomm Inc. will receive a $44.25 million claim for defects on the six satellites it launched in June 2008 following a settlement with its insurance underwriters, Orbcomm announced Dec. 16, 2009.

The Fort Lee, N.J.-based company had filed a $50 million claim, but accepted a reduction based on an analysis of the remaining value in two of the six satellites.

Accepting the lower figure permits Orbcomm to avoid negotiations with insurers over satellite ownership. The company will retain title to the two satellites that are still operating, which might not have been the case if underwriters had agreed to the full $50 million payout.

Orbcomm Chief Executive Marc Eisenberg said Dec. 17, 2009, that the settlement is definitive, and that the company will not seek arbitration on behalf of the $5.75 million remaining from its original claim.

The six satellites were launched together. All carry Automatic Identification System (AIS) maritime surveillance payloads to provide basic information on ship identity when the vessels are beyond the range of ground-based systems that now provide that service. Several companies in the United States, Canada and Europe, as well as several government agencies, are planning AIS-related satellite launches.

The defective Orbcomm satellites were built by Polyot of Russia, now owned by Moscow-based Khrunichev State Research and Production Space Center, with contract oversight by OHB Technology of Germany.