Updated from 8:28 a.m. EDT

New ICO

, formerly

ICO Global Communications

, emerged from Chapter 11 bankruptcy on Wednesday following a $1.2 billion bailout by billionaire investor Craig McCaw.

In a statement, New ICO said it would propose a merger between New ICO and McCaw's other venture,

Teledesic LLC

, which plans to transmit computer traffic, voice and data via satellite to parts of the world where fiber-optic lines do not exist.

Under the terms of the proposal, New ICO and Teledesic would become wholly owned subsidiaries of

ICO-Teledesic Global

, a new holding company that includes the satellite assets of McCaw's private investment company,

Eagle River Investments

.

Eagle River, based in Bellevue, Wash., has said it wanted ICO's partially built network because of its focus on data services, a feature expected to be a major selling point of Teledesic's satellite communications network.

Other investors in Teledesic include

Microsoft

(MSFT) - Get Report

founder Bill Gates, who co-founded Teledesic,

Motorola

(MOT)

and Saudi Prince Alwaleed Bin Talal.

A spokesman for ICO declared false a report from

The Wall Street Journal

Wednesday that these moves could boost revenue for satellite maker

Hughes Electronics

(GMH)

as ICO would call for eight additional satellites.

Joe Tedino, a company spokesman for ICO, said, "Unfortunately, the report in the

Wall Street

Journal

was just wrong. There will not be an 8-satellite increase to the New ICO constellation."

Hughes shares were trading down 2 1/8, or 2%, at 87 5/8 in afternoon trading. (Hughes closed down 1 7/8, or 2%, at 87 7/8.)