Rumor on the street is that the WSJ story is essentially right. Verizon pays the government $4.7 billion for Nextwave. Nextwave gets $11 bill or 16-4.7 bill. Pays short term capital gains tax on the $11 or about $4.7 billion for state (NY) and feds. Nextwaves nets about $6.3 billion. The bad news for Q though is that the guys that bought the long term debt for maybe $.1 on the dollar, i.e. vulture investors get almost all of this while common shareholders get almost nothing. UBS - Warburg walks away with $50 million for offering the loan which was never used.
These are the guys who make out like bandits (apart from the lawyers).
Article from Business Week on vulture investors:
On Aug. 16, bankrupt wireless startup NextWave Telecom Inc. held a hastily arranged news conference before a packed crowd in a ballroom near New York's Grand Central Station. The topic was its master plan to build a high-speed Internet network across the U.S. The plan had been stuck in neutral since the venture first won its most valuable asset--wireless spectrum licenses--five years ago.
Few people noticed one of the most important men in the room, Douglas P. Teitelbaum, seated quietly in the back row. The managing principal of Bay Harbour Management, a $700 million vulture fund, had just thrown the troubled wireless venture a lifeline. Despite the meltdown in telecom stocks and a nasty fight with the Federal Communications Commission to keep the licenses, Teitelbaum, already the company's largest investor with a 6% stake, decided to bet that NextWave would someday become a major wireless player. So he led a group, including other funds, UBS Warburg, and equipment maker Qualcomm Inc. (QCOM ), that sank another $5.5 billion into it. |
