- The Washington Times - Tuesday, May 28, 2002

Motient Corp. in January followed in the footsteps of other telecommunications companies like ESpire Communications Inc., Teleglobe Inc., Teligent Inc. and Net2000 Communications Corp.: It filed for Chapter 11 bankruptcy protection.
Now the Reston company, which operates a two-way messaging network, has broken from the pack and emerged from bankruptcy.
It is a rare accomplishment, but Motient's problems still aren't over.
"Now, we've got to rebuild investor confidence," said Motient President Walter V. Purnell Jr.
On Oct. 1, the company was unable to make a $20.5 million interest payment and continue funding operations.
It had laid off 25 percent of its work force, or 85 workers, in September. Motient had 332 employees as of April 15.
In October, the company called off its purchase of Rare Medium Group Inc. Rare Medium was flush with cash when the two companies signed an agreement to join forces in May 2001. But by October, Rare Medium's sales had fallen and much of its $90 million in cash on hand was gone.
Motient filed for bankruptcy on Jan. 10, listing $495 million in debts and $238 million in assets.
After 95 days, the company received approval from U.S. Bankruptcy Court for the Eastern District of Virginia to eliminate $500 million in debt. It emerged from bankruptcy on May 1.
Now, Motient is smaller and, its leaders say, more determined to turn a profit, something the company has not done since its founding in 1988 as American Mobile Satellite Corp.
"We've gone through the process, and we never want to do it again," said Chief Financial Officer W. Bartlett Snell.
Motient convinced bondholders to erase $335 million in debt in exchange for equity in the company. Bondholders received 25 million shares of new stock, worth about $200 million, as well as five seats on the new board of directors and control the company.
That move helped reduce Motient's debt to $31.1 million.
Bondholders agreed to the reorganization partly because Motient was able to raise money easily by divesting itself of holdings in other companies. It used money from the stock sales to pay down bank debt.
Motient raised $42.5 million in November by selling its satellite assets to Mobile Satellite Ventures LP, a satellite communications company it started as a joint venture in 2000. The company raised $38.3 million by selling 2.5 million shares in XM Satellite Radio in two transactions last year.
"If I had my choice, I would have divested of XM in a different time, at a different price and for different reasons, but we did what we had to do. That one I am disappointed in," Mr. Purnell said.
But Motient kept a 25 percent stake in Mobile Satellite Ventures, which might have been the most important factor in convincing bondholders to trade their debt for equity, said Igor Volshteyn, a research analyst at Austin, Texas, securities firm Tejas Securities Group Inc.
Motient's stake could be worth $1 billion one day because Mobile Satellite Ventures owns potentially valuable spectrum that supports advanced wireless applications, Mr. Volshteyn said.
The struggle with bankruptcy put first-quarter sales of Motient's messaging services at $12.3 million, down $5.7 million for the same quarter a year earlier, according to a regulatory filing with the U.S. Securities and Exchange Commission.
The company still relies on few customers for the bulk of its revenue. Four customers accounted for 46 percent of sales during the first quarter. United Parcel Service Inc. and International Business Machines Corp. are among Motient's biggest customers. Motient's wireless-transmission network supports e-mail, and gives employees electronic data transfer capabilities and remote access to corporate databases.
Motient had just $20 million in cash on hand at the end of March, though it predicted it would have enough money to last into 2003.
"The thing that concerns us the most is that we are relying on revenue growth we just don't feel you can save your way to profitability," Mr. Purnell said. "I don't think you're out of the woods until you're profitable, and you're not beholden to anyone else, other than your customers. So no, we're not there yet. We've still got some work to do to get cash-flow positive and profitable."


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