November 24, 1997
Teligent Raises $400 Million
In Debt, Equity Offerings
By STEPHANIE N. MEHTA
Staff Reporter of THE WALL STREET JOURNAL
Teligent Inc., a start-up wireless phone carrier, raised $400 million in a scaled-back debt offering and an initial public offering that paid off handsomely for Chairman Alex J. Mandl.
Teligent Taps Northern Telecom for Financing, Role in Network (Nov. 5)
NTT to Invest $100 Million in Telecom Venture Teligent (Sept. 30)
The company's IPO of 5.5 million shares was priced late Thursday at $21.50. On Friday, Teligent stock shot up to about $27 before settling at $25.625, giving the carrier a total market capitalization of about $1.33 billion.
Mr. Mandl, who left his post as president of AT&T Corp. to join Teligent last year, also did well. According to the company's prospectus, Mr. Mandl owns a 1.9% stake in the company, now valued at $25 million. In addition, the document said he received options to purchase 4.9 million Teligent shares over the next five years at an exercise price of $5.77. If all those shares had vested on Friday, Mr. Mandl would have made more than $97 million.
The company and its underwriters also plan to exercise the underwriters' overallotment options, which would make an additional 825,000 shares available to the public.
The debt market was less receptive to the company. Last week Teligent scaled back its planned $400 million high-yield debt offering to $300 million, citing difficult market conditions for such fund raising. The 10-year bonds priced with a yield of 11.5%. "The fact that they were able to execute at that price in what has been a very volatile and choppy [bond] market is actually a positive," said Chase Manhattan Bank high-yield analyst Les B. Levi.
Teligent, Vienna, Va., said it has sufficient funds to finance network construction through the year 2000. The company aims to deliver local telephone service and Internet access to business customers via a "fixed wireless" system of antennas and radio equipment.
In addition to the net proceeds from last week's offerings, the company recently won $780 million in vendor financing from equipment-maker Northern Telecom Ltd. Additionally, Japan's giant national phone company, Nippon Telegraph & Telephone Corp. invested $100 million earlier this year.
Mr. Mandl said the company plans to roll out service in 10 markets by the end of next year. It will deploy service in another 20 markets in 1999. "That's a fairly ambitious roll out," Mr. Mandl said in an interview Friday.
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