Nextwave stock dives on cash crunch
forbes.com
Associated Press 08.08.08, 6:31 PM ET
SAN DIEGO -
Shares of NextWave Wireless Inc., which owns wireless spectrum and makes wireless network equipment, dived Friday and hit a 52-week low after it said cash was running out.
The stock was down $1.90, or 66.7 percent, to close at 95 cents, after hitting an annual low of 89 cents earlier in the session.
Late Thursday, San Diego-based NextWave said it had $71.1 million in cash and similar instruments at the end of June, less than it spent in the second quarter. Unless it raises money, its cash will run out at the beginning of October.
The company is negotiating for financing to take it through June 2009, according to Allen Salmasi, chairman and chief executive. That could include a $100 million private placement of junior preferred stock, to be completed next month, as well as up to $100 million in debt financing.
NextWave blamed worldwide economic conditions for a drop in bookings and sales of its network equipment. Also, its plan to sell its U.S. spectrum holdings have been delayed by market conditions and regulatory issues, it said.
Analyst Eyal Ofir at Canaccord Adams placed his "Speculative Buy" rating on the company under review after the announcement, saying failure to secure financing could have a materially adverse effect on the company.
In July, NextWave said it had reached a deal to sell part of its U.S. spectrum for $150 million to four unnamed parties. Under the terms of a lending agreement, the proceeds were to go into a restricted cash account and to redeem debt.
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