Motorola has been ordered by a US judge to pay Chase Manhattan Bank and other lenders $300m to satisfy part of a loan made to its failed satellite phone spin-off, Iridium.
Iridium planned to build a satellite system that would provide cell-phone services almost anywhere in the world.
Chase argued that Iridium was "dominated and controlled" by Motorola and that the two companies gave the bank false information about Iridium's revenues before the loan was issued.
US District Court Judge Alvin Hellerstein said: "There is no right on the part of Motorola to be excused from its obligation to provide its guarantee. There is an obligation on the part of Motorola to deliver that guarantee obligation in response to the demand that Chase made."
But Motorola disagreed with the decision and maintained that there were grounds for appeal.
The company said in a statement: "It continues to be our position that there was no breach of contract by Motorola relating to Chase's decision to loan money to Iridium, and that Motorola does not owe Chase the $300m.
"The people who invested in Iridium, or lent money to it, were very sophisticated investors. They knew the risks involved. It is not unlike when you drill for oil: there is always the potential of ending up with a dry hole. Regrettably, this was a telecoms dry hole."
Motorola founded Iridium in 1991 and later spun it off as a company that went public in June 1997. Iridium filed for bankruptcy court protection in late 1999.
Iridium's assets were purchased in December 2000 by a group of investors which renamed the company Iridium Satellite Corp.
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