Satellite telecommunications provider TerreStar is preparing a Chapter 11 bankruptcy filing after its more than $1 billion debt load has rendered the company near insolvent in its current form with just $15 million in cash on hand and $42.5 million remaining from a $100 million credit line provided by the Harbinger hedge fund and its hardware partner in EchoStar.
The credit line was issued to the company in order build out its second satellite in Terrestar 2 to expand its satellite coverage area, but the company has been losing money to the tune of $200 million+ every year in order to launch the service which was only recently launched after being announced in 2009 in collaboration with AT&T.
An unnamed creditor is also seeking to convert some of Terrestar’s debt to equity in order to provide it with a $75 million bridge loan while the company operates under bankruptcy protection with the announcement expected in the next few days.
