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Shareholder Sues Motient Over Asset Allocation

Posted on: Tuesday, 30 August 2005, 00:00 CDT

Aug. 27--Money-losing Motient Corp. is being sued by its largest stockholder, alleging that the Libertyville-based wireless data carrier has directed millions of dollars in company assets to firms controlled by Motient board members.

Dallas-based fund manager Highland Legacy Ltd. filed its lawsuit this month in Delaware, where Motient is incorporated. Highland has also filed lawsuits in Texas seeking $90 million from Motient. That money was paid by Highland to buy stock from Motient in April, which Highland now claims are invalid shares.

Motient was reorganized when it emerged from bankruptcy in 2002 and has steadily lost money. In fiscal 2004, it lost more than $72 million with revenues of $37 million, according to Highland's lawsuit.

Named in Highland's lawsuit are five of Motient's board members as well as Tejas Inc., an Austin-based investment bank used by Motient, and Communications Technology Advisors, a restructuring firm with offices in Albany, N.Y., and Reston, Va.

Motient directors who have financial interests in CTA and Tejas have given non-compete contracts to those firms, enabling them to collect millions in fees, the lawsuit contends.

Motient's chief asset is its 49 percent ownership of Mobile Satellite Ventures, a Reston-based firm that is attempting to establish a hybrid communications system that utilizes both satellites and ground-based antennas.

If federal authorities approve, MSV could establish a nationwide wireless phone network at costs far below those of land-based wireless networks. The lawsuit states that Motient's satellite holdings are the main reason the company's market capitalization is around $1.5 billion.

Highland seeks unspecified damages related to what it termed "corporate chicanery exposed in the last several years."

Christopher Downie, Motient's principal executive, who is among those named in the Highland suit, said in an e-mail that the company declines to discuss the suit beyond a response in an SEC filing.

In that filing, the company said it believes the lawsuit has no merit. It also said that James Dondero, a member of Motient's board affiliated with Highland, in many cases voted to approve the fees that Highland's lawsuit now objects to.

Motient's filing also said that the Highland lawsuit was filed after Motient's directors formed an executive committee that didn't include Dondero.

It further states that Dondero or Highland have filed more than 50 lawsuits since 2002, some of them similar to the one filed in Delaware this month against Motient.

A Highland executive said Thursday that the firm had "never filed any suit like this before."

Motient began life in the 1980s when Motorola Inc. built a radio network to enable IBM Corp. field engineers to communicate. Eventually, an expanded network, called ARDIS, was launched by Motorola and IBM that was commercially available to business users.

ARDIS was eventually sold to American Mobile Satellite and in 2000 changed its name to Motient.

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MNCP,

Source: Chicago Tribune

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