UBS to Provide NextWave $2.5 Billion
By Jeremy Pelofsky
WASHINGTON (Reuters) - NextWave Telecom Inc. (NXLC.PK), the mobile
telephone company trying to emerge from bankruptcy, said on Tuesday it has sealed
$2.5 billion in debt financing from banking giant UBS Warburg to fund the build-out of its
network.
UBS Warburg, the investment banking arm of Switzerland's UBS AG (UBSZn.VX),
will also act as NextWave's financial adviser as well as help the company complete its
plans to emerge from bankruptcy which could occur later this year.
``Their financial resources and global wireless expertise will help us deploy our
advanced IP-based wireless network and introduce the next-generation, high-speed
mobile Internet services that the market is demanding,'' said Allen Salmasi, NextWave's
chairman and chief executive officer.
Further details of the debt agreement were not immediately available. NextWave has
filed its plan of reorganization with the bankruptcy court in New York, and the court is
expected to hold a hearing in mid-September to review the plan.
Key to launching its network will be winning a court battle for the necessary wireless
licenses. The Federal Communications Commission (news - web sites) tried to
repossess the valuable wireless licenses after the company failed to pay for them on
time.
Before an appeals court ruled that the FCC (news - web sites) violated bankruptcy laws
when it tried to repossess the licenses, the regulator re-sold the licenses to rival wireless
carriers, including Verizon Wireless (NYSE:VZ - news)(VOD.L), AT&T Wireless
Services (NYSE:AWE - news) and VoiceStream Wireless (DTEGn.DE), among others,
who want airwaves to expand and improve services.
The FCC plans to appeal the decision to the U.S. Supreme Court (news - web sites) and
has asked that the licenses not be handed over to NextWave until the high court decides
whether to hear the case.
That decision will likely come later this year and if the Supreme Court agrees to hear the
case, a ruling would not come until June 2002, further delaying the use of the coveted
airwaves.
Last week, NextWave went to Wall Street to outline its plan to build out its network and
emerge from bankruptcy but that is contingent on winning the legal battle, leaving some
analysts skeptical.
``We believe the NextWave spectrum will end up in the hands of those who bid for it in
the re-auction,'' Lehman Brothers analysts said last week after the presentation.
NextWave is also almost done lining up subscribers for up to $3 billion in preferred stock
the company plans to offer to finance its plan. Last week, Salmasi's former employer,
wireless technology provider Qualcomm Inc. (Nasdaq:QCOM - news), agreed to invest
$300 million in NextWave.
NextWave plans to launch its data network in dozens of markets in December and
expand to 95 markets by April and add voice services by the end of 2002. The company
plans to act as a carrier's carrier providing airtime as a wholesale operation to media and
entertainment content providers, financial services companies and other retail operators.
The rival wireless carriers that won NextWave's licenses in the re-auction earlier this
year have proposed paying NextWave to abandon its claim to the airwaves and allow
the auction results to stand. Additionally, A partner of Verizon Wireless has proposed
buying parts of NextWave's spectrum. |
