Nextel to Make Bid for NextWave
Nextel Plans Hostile Bid for NextWave, $5.3 Bln for Licenses
Washington, Dec. 21 (Bloomberg) -- Nextel Communications Inc. said it plans a $3 billion hostile bid for bankrupt NextWave Telecom Inc. and asked federal regulators to rule on a plan to pay $5.3 billion for NextWave's unused wireless phone licenses.
The Nextel offer, made in a filing at the U.S. Federal Communications Commission, raises the stakes for the 56 licenses NextWave won for $4.7 billion in a 1996 auction, though never developed. NextWave sought bankruptcy protection in December 1998 when it was unable to pay the commission for the licenses.
The licenses are caught in a legal battle in which the U.S. Appeals Court in New York in November overturned a bankruptcy judge's decision the licenses are worth $1.02 billion. The FCC had challenged the bankruptcy court
In a filing at the FCC, Nextel said it would pay the agency $5.31 billion cash, offer NextWave shareholders $2.5 billion in Nextel common stock in a hostile tender offer and settle with NextWave's creditors for $500 million. Earlier, in an agreement with the FCC, Nextel offered to pay up to $6 billion for the wireless licenses.
The company asked the FCC to make a quick decision, since the action will affect an ''anticipated hostile tender offer.''
NextWave won the licenses under FCC rules to encourage small business and minority ownership of wireless services. Nextel asked the agency to waive those rules so it can qualify for the spectrum, now used by other companies to provide wireless phone services.
Legal Wrangling
The companies, the FCC, the courts and Congress have disagreed how to resolve the issue. NextWave argues it should not have to pay more than the $1.023 billion price set by a bankruptcy court judge. The FCC said the licenses are worth the $4.7 billion bid by NextWave and the agency challenged the judge in U.S. District Court and the appeals court.
The Clinton administration proposed a budget amendment to Congress that would have set in place a new auction for the spectrum. That amendment would have changed the rules for the auction, and given Nextel the opportunity to win the licenses. The amendment failed in negotiations.
Last week, NextWave said it received $1.6 billion from Global Crossing Ltd., AT&T Corp.'s Liberty Media Group and others that may let it emerge from bankruptcy and retain the wireless. Some of those investors are ineligible to hold the NextWave licenses unless the rules are changed.
Shares of Reston, Virginia-based Nextel rose 1 5/8 to 94 5/16 in trading on the Nasdaq Stock Market.
Dec/21/1999 20:06
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