NextWave to Unveil New Financing -Source
August 05, 2001 04:28 PM ET
Email this article Printer friendly version
By Jeremy Pelofsky
WASHINGTON (Reuters) - NextWave Telecom Inc., fresh with new life after a court awarded wireless licenses to the bankrupt company, will outline on Monday billions of dollars in new financing as part of its plan to emerge from bankruptcy, according to a person familiar with the company's plan.
The company's plan will include payment for all valid claims, including money owed to the U.S. government for coveted wireless licenses, the person said. The licenses that cover major metropolitan markets are in hot demand by rivals who want the airwaves to expand and improve mobile telephone service.
"The plan will provide for payment of all valid claims against the company, including the government's claim, plus applicable interest," the person said. "The new equity is expected to be supplied in principal part by NextWave's original group of equity investors."
NextWave's NXLC.PK previous equity investors included Global Crossing Ltd. GX.N, Liberty Media Group LMGa.N and the Texas Pacific Group.
The person declined to say precisely how much money and who would be involved. The plan will be filed in a bankruptcy court in White Plains, New York, on Monday.
The filing comes as rival wireless companies are pressuring the government to work out a settlement for the licenses which NextWave won back when an appeals court ruled the Federal Communications Commission violated bankruptcy laws when it took the licenses back after NextWave failed to pay on time.
The FCC tried to break the licenses up and sell them to those competing wireless companies for $15.9 billion in January but the results of that sale are in limbo after the court ruling awarded the spectrum back to bankrupt NextWave.
The fight harks back to 1996 when NextWave won the licenses with bids of $4.7 billion in auctions designed to promote competition in the newly emerging mobile telephone industry by allowing only certain qualified smaller start-ups to bid.
But now, NextWave could walk away with much more money than it originally bid for the licenses either through a settlement or selling them to competing wireless firms.
TALKS FOR LICENSES?
Verizon Wireless, the nation's biggest wireless firm and has the most at stake in the January sales, said on Friday one of its business partner's has bid over $3 billion for parts of 50 NextWave licenses in key markets like New York and Seattle.
On Friday, NextWave declined to comment on the talks Verizon Wireless said were underway with its partner, Valley Communications, but instead said that it has been approached by many companies with different proposals for working together and that NextWave has "listened to everyone."
If NextWave decides it does not need all 30 megahertz of the spectrum allotted in many of the licenses at issue, a deal like the one proposed by Valley Communications could prove to be enticing, although regulators would likely have to approve.
Plus, five winners in the January auction, including Verizon Wireless, have urged the government to open settlement talks with NextWave to preserve the outcome of the January auction by offering the company $4-$5 billion to abandon its claim to the airwaves.
Verizon Wireless, a joint venture of local phone company Verizon Communications VZ.N and Britain's Vodafone Group Plc VOD.L, won 68 licenses involving NextWave spectrum with bids of $8.55 billion in the January sale covering key markets such as Los Angeles and New York.
Either through settlement or a deal, the moves by Verizon Wireless puts the company in a prime position to obtain some of the spectrum -- needed to expand and improve services -- in those two scenarios.
It could also lead the other winners of the NextWave airwaves in the January auction, VoiceStream Wireless and partners of AT&T Wireless Services and Cingular Wireless, to scramble for deals with the company for pieces of the licenses should NextWave prevail.
VoiceStream is owned by Deutsche Telekom AG and Cingular is a joint venture of local phone companies BellSouth Corp. and SBC Communications Inc.
MOVING AHEAD WITH OPTIONS
Still, the Hawthorne, New York-based NextWave is showing signs that it is moving ahead with its plans, exemplified by a deal inked in July for Lucent Technologies Inc. to begin constructing the company's mobile digital data network, a deal worth $100 million.
The company also recently announced $200 million in financing it received from a fund managed by BFD Capital, the German private equity firm.
It will cost $2 billion to build the network while $4 billion will be used to pay for the licenses, other creditors as well as finance its operating losses, a plan that covers three years once its reorganization plan is confirmed, NextWave's chairman Allen Salmasi said in a July interview.
"The plan provides full funding for a build-out of NextWave's planned 3G (third generation) wireless network," the person familiar with the plan said.
It also still owes the government about $4.4 billion for the licenses, plus interest, according to Salmasi but he has said previously the company has no intention of settling or selling the licenses.
Under the reorganization plan, NextWave will pay what it owes the government to date and resume paying installments for the licenses, payments to end in 2007, the source said.
But the fight may not be over because the U.S. government is expected to announce soon its intention to ask the U.S. Supreme Court to review the appeals court ruling that said the FCC violated the law when it repossessed the licenses.
reuters.com |
