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Worldspace Continues to Work With Creditors

‘Our cash needs are challenging but we are working hard.’

Worldspace won a little debt relief this week.

The company, based in Maryland but hoping to build a commercially viable mobile satellite service in Europe, said it signed agreements with four holders of bridge loan notes and convertible notes.

The creditors have agreed to defer until the end of this month Worldspace’s obligation to pay $17.7 million in principal plus accrued interest “and to forbear exercising their rights and remedies with respect to the payment default.”

Chairman/CEO Noah Samara says this gives him time to bring in funds already committed and to raise more.

The agreement also accelerates payment of the remaining outstanding amount but removes capital structure restrictions, which WorldSpace said would have remained until 2010.

“Our cash needs are challenging,” Samara stated, “but we are working very hard to address this in order to take full advantage of the milestones we have achieved in Europe, including licenses from Germany and Switzerland, and successful on-the-ground testing of our service in Italy, where we expect to launch Europe’s first satellite radio service as early as 2009.”

The company and its creditors also reached several further agreements over the amounts due.

The company said last month it has about 170,000 subscribers, most of them in India.