May 15, 2002 WSJ -- "Leap Wireless Says It Needs To Raise $225M More Cash"
I just wanted to copy and paste this thing onto the thread (before it disappears from the WSJ's easily obtainable stuff).
I am going to dare to publicly state the following :
(As with a lot of other things I see in the financial "press") ... I can come up with only two scenarios as to why the Wall Street Journal printed this story on May 15, 2002 :
1. They are STUPID.
They have no idea that this is old news, out already (according to some on this thread, or the Yahoo Leap Wireless thread
messages.yahoo.com )
around early March 2002.
(I did not independently confirm this, but early March 2002 sounds about right).
2. They are corrupt.
In that ... they were contacted by someone who wanted Leap Wireless shares to go down, who asked the WSJ to run a story that would convince anyone not well acquainted with the truth ... that Leap must now have a total of $450 million (not $225 million) to worry about before 12/31/03.
I do not see any other explanation other than these two. Thus, I do not fear a libel suit from Dow Jones.
Jon.
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Leap Wireless Says It Needs To Raise $225M More Cash
By CHAD CLINTON, DOW JONES NEWSWIRES; 202-628-9798;
CHAD.CLINTON@DOWJONES.COM
WASHINGTON -- Leap Wireless International Inc. (LWIN) said it will
need to raise about $225 million of additional cash assuming it meets its
current operating plan objectives prior to Dec. 31, 2003, according to its
quarterly report filed Tuesday with the Securities and Exchange
Commission.
Of that total, roughly $200 million will be used to pay down vendor debt, or
amend or refinance its vendor debt, to meet the total debt-to-capitalization
covenant under the vendor credit facilities and to provide working capital.
The company also said it might need to either refinance or amend its
equipment vendor debts and might also need to get additional financing to
service or extinguish its debt.
In its 10Q filing, Leap Wireless expects that it will require significant
additional financing this year and in 2003 under its vendor credit facilities to
complete the buildout of additional cell sites and to expand the capacity of
its wireless networks under its 40 Market Plan, the filing said.
In addition, the company said it could require significant additional capital
to acquire new wireless licenses, to invest in new voice or information
services or ventures, and to launch additional markets.
Leap Wireless doesn't expect to launch additional markets unless it raises
additional capital and gets amendments to vendor financing arrangements,
according to the filing.
Elsewhere in the filing, Leap Wireless said that earlier this month it received
a refund of $59.5 million of an $85 million deposit from the Federal
Communications Commission related to auction 35. The FCC refunded
$14.7 million of the deposit in February.
The company was the winning bidder on 22 wireless licenses in auction 35
and agreed to pay $350.1 million.
NextWave Telecom Inc. (X.NWV) is a party to litigation against the federal government challenging the
validity of the auction and has prevailed on some of its claims in the U.S. Court of Appeals for the District of
Columbia Circuit.
In response to a petition by the FCC, the U.S. Supreme Court agreed to review the case. The NextWave
litigation has substantially delayed the grant to Leap Wireless of these auction 35 wireless licenses, according
to the filing.
If these wireless licenses are granted to the company, it likely would be required to make full payment of the
$350.1 million within 10 business days of a public notice issued by the FCC establishing a payment deadline.
Separately, Leap Wireless said it expects to spend a total of $390 million over the 12 months that began April
1.
According to the filing, the company will spend about $241 million for capital expenditures to complete the
buildout of wireless networks, and $30 million for general overhead and other expenses, including those for
product development, which cannot be funded from cash flows at Cricket Communications Inc. because of
vendor loan covenants.
In addition, the company said it will spend around $32 million in connection with deferred payments of
completed acquisitions of wireless licenses and wireless technology assets; and $87 million for cash interest
and fees and principal amortization payments in December and March 2003 under a vendor facility with
Lucent Technologies Inc. (LU).
Leap Wireless also said that for the 12 months from April 1, its interest under senior notes, senior discount
notes and vendor facilities with Nortel Networks Inc. (NT) and Ericsson Wireless Communications Inc., and
interest under its vendor facility with Lucent prior to November 2002, is either deferred and added to principal
or otherwise paid from its restricted investment accounts.
The San Diego company deploys, owns and operates wireless networks worldwide.
Updated May 15, 2002 11:14 a.m. EDT
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