WorldSpace Inc., which was created to beam satellite radio to the poor of the developing world and helped spawn XM Satellite Radio Holdings Inc. to serve the U.S. market, yesterday sold stock to the public in an initial offering that valued founder Noah A. Samara's holdings at more than $100 million.

In addition to allowing Samara to cash in millions of dollars of shares yesterday, the company said in a regulatory filing that the IPO would trigger stock awards for Washington insiders who serve on WorldSpace's board -- Jack Kemp, a former congressman, cabinet secretary and vice presidential candidate; Charles McC. Mathias Jr., a former U.S. senator from Maryland; and William Schneider Jr., a former undersecretary of state who heads a scientific advisory board at the Pentagon.

The cash infusion also could improve potential returns for the company's longtime backers, a group of Saudis that includes Salah Idris, the owner of a plant in Sudan that the United States bombed in 1998 alleging it had ties to Osama bin Laden, and Khalid Bin Mahfouz, a banker who settled allegations in the BCCI bank scandal in the early 1990s and has since been accused in a lawsuit of backing bin Laden financially.

This prompted WorldSpace to make an unusual disclosure to the Securities and Exchange Commission: "Allegations of ties between certain of our investors and terrorism could negatively affect our reputation and stock price." The investors "have repeatedly denied all such allegations," the company said, adding that they no longer have any "voting control rights."

A company spokeswoman declined to comment, saying securities regulations prevent Samara and others from talking about the company during the so-called quiet period around the offering.

The offering was a boost for the D.C. company, which has lost more than $2 billion since it was founded in 1990. WorldSpace reported revenue of $8.6 million last year, down from $13.1 million in 2003. The company launched its first satellite in 1998 and recently counted 63,000 subscribers across Africa, India and the Middle East, according to a company filing with the SEC. That was far short of the millions of subscribers the company told the SEC that it must ultimately have "in order for our business model to succeed."

WorldSpace said before the offering that it planned to sell 11.5 million shares, which would have grossed $241.5 million at the offering price of $21. It did not report the number of shares that it actually sold. The company said in an IPO prospectus that Samara planned to sell shares that would have been worth $7.7 million.

The new stock, which trades on the Nasdaq Stock Market, enjoyed a warm reception. Investors bid up the share price to a high of $26 before it closed at $22.36.

Roger J. Rusch, a satellite communications consultant, said the IPO reminded him of the tech bubble of the late 1990s. "I cannot understand why any serious investor would buy into this enterprise," said Rusch, who is president of TelAstra Inc., which advises investors. "It's the old argument that there's a new economy, and the way that works is that companies operate at a loss and they find new investors to fund the operation, so it operates like a charity."

Amber Zentis, a former director of investor relations for WorldSpace, countered that the business could become a phenomenon. "In other parts of the world, you can't charge as much per subscriber" as in the United States, "but there are millions more subscribers to be had."

Samara, 47, grew up in Ethiopia and Tanzania, the son of a diplomat, according to a 1998 Washington Post story, and earned a law degree at Georgetown University. Before founding WorldSpace, he worked at the law firm Venable, Baetjer, Howard & Civiletti LLP and at an early satellite telecommunications company called Geostar Corp.

WorldSpace helped launch XM Satellite Radio years ago with initial funding and technology but sold its stake in 1999. XM chose the richer U.S. market and arranged to have its radios installed in cars, amassing 4.4 million subscribers. Samara, meanwhile, focused WorldSpace on poorer parts of the world, such as his native Africa, where he saw a desperate need for information.

It "was not money that inspired the creation of the WorldSpace system. It was need," Samara said in congressional testimony on Africa in 2001, citing especially the spread of AIDS. "The sooner we infuse Africa with information, the sooner it will develop the means to generate greater income, heal its sick, educate its populace and govern with fairness and compassion," he said.

One challenge Samara faced was getting his radios distributed among impoverished populations. WorldSpace began offering free service in Africa in 2000. In an evolution of Samara's plan, it is now concentrating on affluent urban populations in India, with ambitions to penetrate China and Western Europe.

In its public offering statement, WorldSpace identified potential risks and obstacles. It said its auditors "have identified material weaknesses and significant deficiencies in our internal controls, and if we are unable to develop, implement and maintain appropriate controls we will not be able to comply with applicable regulatory requirements imposed on reporting companies."

"We have experienced severe working capital constraints for several years and, as a result, we have operated with very limited staffing of key functions, including accounting," it said. The firm's finances improved in December, when institutional investors put up $155 million.

WorldSpace launched a satellite serving Africa in 1998 and another serving Asia in 2000. The satellites are designed to operate for 12 years, the prospectus said. Much of the ground-based infrastructure that would enable the company to introduce mobile service has not yet been built, the filing said.

The money men who nurtured WorldSpace with investments of more than $1 billion over the years include Idris and Bin Mahfouz. Idris has stated that the U.S. government made "a grave error" in bombing his factory in Sudan, and he succeeded in getting the Treasury Department to release $24 million of his assets that it had frozen. The intelligence that prompted the strike on his factory has been disputed.

The Federal Reserve Board in 1992 charged Bin Mahfouz with helping BCCI conceal its ownership and financial condition. He denied the allegations and agreed to pay hundreds of millions of dollars with other parties to settle various claims. In litigation over the terrorist attacks of Sept. 11, 2001, families of victims have alleged Bin Mahfouz was "a major financial sponsor" of bin Laden and his terrorist network. A lawyer for Bin Mahfouz has written that his client "has never supported or had any relationship whatsoever with Osama bin Laden or terrorism of any kind."

The company says the Saudis no longer have "any direct debt or equity." However, Idris holds a majority stake in a Singapore company that holds 17.4 million shares, WorldSpace said in an SEC document. The Singapore company is controlled by Samara. Two sons of Bin Mahfouz control a Cayman Islands company that is entitled to 10 percent of WorldSpace's earnings before taxes and other charges under a royalty agreement, a WorldSpace filing said.

Samara's direct and shared stock holdings give him control of WorldSpace, including the election of board members, the company reported, and WorldSpace has reserved 5 percent of its satellite capacity for a nonprofit organization he chairs.

In December, Samara repaid a debt of $1.6 million to WorldSpace, the prospectus said.

Samara held stock options, exercisable within 60 days, that would have been worth $104.4 million at an estimated offering price of $20 -- less than the actual offering price of $21, the company reported. He also held shares of restricted stock, which were to vest in 180 days, worth $13.2 million at yesterday's close, the SEC filing said.

Altogether, Samara controlled or shared control before the IPO of 28.7 million shares, worth $641 million at yesterday's close. The company did not say how much of that he personally owns.

Staff researchers Richard Drezen and Julie Tate contributed to this report.

Noah A. Samara

is chairman and chief executive of WorldSpace Inc.