NexWave DIP Lender Endorses and Supports Plan of Reorganization and Urges Other Stakeholders to Vote in Favor of Plan
SOURCE: BFD Holdings, Ltd.
- BFD Suggests Investors Read Nextel 8K Carefully and Warns of Potential Stalling Tactics by FCC Staffers -
NEW YORK, Aug. 20 /PRNewswire/ -- BFD Holdings, Ltd., the general partner of the super majority participant in NextWave Telecom Inc.'s Debtor In Possession loan, today announced that it has reaffirmed its continuing support for, and endorsement of, NextWave's First Amended Plan of Reorganization and urges NextWave's creditors and equity holders to vote in favor of that Plan. BFD noted that last week U.S. Bankruptcy Court Judge Hardin has issued a Temporary Restraining Order subject to further consideration at a subsequent hearing restraining Nextel Communications, Inc. (Nasdaq: NXTL - news) from further attempts to interfere with NextWave's reorganization efforts absent further order of the Bankruptcy Court. In response to these events, an official of BFD stated, ``The current plan, as proposed by NextWave, is not only fair and reasonable to all parties affected, it is the only confirmable plan that has been presented to the Bankruptcy Court, under which NextWave can get out of bankruptcy.'
BFD has read Nextel's recent 8K related to their FCC/DOJ understanding. The Nextel 8K annexes the deal term sheet as its first exhibit. Investors are also urged to read the second exhibit to the 8K , which is the cover letter to the FCC/DOJ deal. That cover letter plainly states that this agreement is merely FCC staffers agreeing to recommend that the FCC accept the term sheet agreement. Therefore earlier statements from Nextel alluding to having ``reached agreement with the US Department of Justice and the FCC, and received their endorsement of Nextel's contemplated plan,' were premature and, in BFD's view, perhaps somewhat misleading. It is clear from all of the documents that the FCC has not granted Nextel any of the licenses in question, nor has it even formally agreed to the basic terms of the deal. Moreover, to those familiar with FCC rules and regulations, it is rather obvious that such a deal, if actually approved by the FCC, would likely require significant further FCC waivers, through a very extensive and lengthy rule making process. Those waivers would include a waiver of the applicable designated entity and unjust enrichment rules for the Entrepreneur's Block. BFD is concerned that the purpose of the FCC/DOJ/Nextel agreements may merely be to stall or derail the debtor's Plan of Reorganization.
The C Block Spectrum covered by these rules was intended to create competition for the incumbent wireless providers and to give small entrepreneurial businesses the chance to enter the wireless business. NextWave is uniquely suited to do this, as it plans to be a ``carrier's carrier' or wholesaler of airtime. This will allow many resellers to enter the wireless business without having to invest billions of dollars into network equipment and licenses, creating competition and reducing prices. BFD believes that if the FCC were to approve the current ``term sheet' deal with incumbent carrier Nextel it would appear to eviscerate Congress's intended purpose of C Block Spectrum use. Furthermore, if the FCC is interested in changing the use purposes of this spectrum, the agency would likely require congressional approval before agreeing to transfer C Block licenses to Nextel.
While it does not appear that the FCC and the DOJ have entered into serious settlement discussions with NextWave, the FCC staff's expression of its inclination to settle the case through an agreement with Nextel seems to signal a willingness to settle the case. BFD is encouraged that such efforts will commit the FCC to putting the C Block Spectrum into public use, rather than just continuing the litigation. However, BFD is disheartened that FCC staffers would seek to settle the NextWave litigation through Nextel, rather than settle with NextWave, which is now fully financed and poised to initiate immediate buildout of the most advanced wireless network to serve the United States.
BFD remains hopeful that the FCC commissioners and the DOJ will work with NextWave to settle their differences. A BFD official added, ``The NextWave Plan is the best for all stakeholders and provides an equitable solution that is expeditious. We strongly urge NextWave stakeholders to vote to approve the Plan so that NextWave can successfully exit Chapter |
