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Technology Stocks : CAWS - Wireless Cable (New and Improved)

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To: webpilot who wrote (5441)	7/21/1998 3:08:00 AM
From: wonk	Read Replies (2) of 5812

webpilot: Where is states, broadcasting licenses cannot be used as collateral, etc., do you think that this is a banking regulation, or is it illegal to borrow money against licenses that are issued by the Federal Government, or the FCC?... You cannot pledge the licenses because the pledgee could immediately take possession of the asset in the event of default. However, from the FCC's perspective such an action would be transfer of control without prior Commission approval. A definite no-no. Generally, closely-held companies that hold spectrum assets are required to pledge the stock. If a default event is triggered, then the pledgee can petition the FCC for an involuntary transfer of control. The pledgee cannot legally take control until permission is granted. With widely-held public companies, the debt covenants are more complex. However, as a rule the FCC's permission is always requested first. Look at any M&A activity between companies with spectrum assets: even in the most mundane situations, the deal does not close until such time as the FCC indicates that the transfer is acceptable. ww

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