| Aug. 7, 2000 NEW YORK - Merchant bank Castle Harlan said on Friday it dropped its $50 million bid to buy Iridium LLC (Nasdaq:IRIQE) because it doubted the bankrupt satellite telephone company would be able to produce steady revenues. "Although Iridium provides a magnificent international point-to-point telephone service, our due diligence and marketing studies were unable to confirm that Iridium would generate even low levels of revenue with a high degree of certainty,'' Castle Harlan said in a statement. The move raises once again the possibility that Iridium may be forced to de-orbit its network of 66 satellites, letting billions of dollars worth of space-age communications gear burn up in Earth's atmosphere. A representative of Iridium, which shut down its service to customers in March, was not immediately available to comment. Critics have said Iridium's pricey phones, which the company promised would provide mobile communications anywhere in the world, were too bulky and required a separate antenna for use indoors or in cars. Iridium, which filed for bankruptcy last year, first faced the prospect of de-orbiting its satellites in March, when a $600 million plan by cellular phone pioneer Craig McCaw to rescue the company fell apart. However, a spokesman for Venture Partners, which expressed interest in Iridium in June, said the company was still interested in the satellite phone company. "Venture Partners is still in it and I think there will probably be further discussions with Iridium, " said Neil Forrest, a lawyer for Venture Partners. Venture Partners told the U.S. Bankruptcy Court for the Southern District of New York in June that it wanted to bid $50 million, although an Iridium lawyer said the firm had failed to provide proof it could fund the bid. Iridium, which was backed by Motorola Inc. (NYSE:MOT - news), had yet to talk with Venture Partners following the collapse of the Castle Harlan bid, Forrest said. When asked if Venture Partners would lower its bid since Castle Harlan did not think Iridium was worth $50 million, Forrest said, "anything is possible.'' In June, Castle Harlan, which manages a $630 million private equity fund, said it would pay $50 million for Iridium, which cost about $5 billion to build, plus giving a 5 percent equity interest in the new company to Iridium's creditors
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