NextWave and Nextel
Agree to Litigation Stand-Down
nextwavetel.com
U.S. District Court Denies FCC Request To Derail
September 1999 Hearing on NextWave Plan of Reorganization
Hawthorne, N.Y. ? August 19, 1999 -- NextWave Telecom Inc. announced today that it has entered into an agreement with incumbent wireless carrier Nextel Communications, Inc. to extend until September 9, 1999, the terms of a temporary restraining order issued against Nextel last week by U.S. Bankruptcy Court Judge Adlai S. Hardin, Jr.
"NextWave and Nextel are not litigating with each other, for now," a NextWave spokesperson said. "NextWave is focusing 100 percent on taking the final few remaining steps toward confirmation of our plan of reorganization. Our plan is oversubscribed with new investments exceeding $750 million. A substantial number of stakeholders have voted on our plan already, and every creditor and equity security holder that has voted to date has voted to accept the plan."
Separately, NextWave announced that the U.S. District Court Southern District of New York, the Honorable Denny Chin presiding, on Tuesday rendered a decision denying the Federal Communications Commission?s request to stay the effect of U.S Bankruptcy Court and District Court judgments favoring NextWave that were rendered earlier this year in its bankruptcy proceeding. During the hearing on the government?s motion, Assistant U.S. Attorney Daniel Alter admitted to Judge Chin that ""[T]he government has been seeking in every way possible to stay the confirmation of [NextWave?s] plan[.]" Mr. Alter also admitted that the government?s recent actions in NextWave?s bankruptcy proceeding result from the government?s conclusion that, under existing law, "there is a very, very high likelihood" that appeals will be rendered moot if NextWave?s plan is confirmed in September and becomes effective.
"Everyone following this proceeding should take note of the government?s admission in open court that the basis for their trying ?in every way possible? to stay our plan is their concern that this case, including appeals, will be over and done within weeks not months," a NextWave spokesperson stated. "Although we agree with the government?s legal analysis," the spokesperson concluded, "we are dismayed at the FCC?s flagrant disregard of the statutory mandate not to engender administrative or judicial delay. We respectfully urge the FCC to stand down from litigation and allow our plan to be confirmed expeditiously and with great value for all interested parties, including the FCC."
The spokesperson also noted that Nextel?s 8(k) filing yesterday with the U.S. Securities and Exchange Commission disclosing materials that were the subject of Nextel?s press announcement last week "has created a distraction, but it is nothing more than that." The spokesperson continued, "The materials confirm that the FCC has not granted any of the waivers that any large wireless carrier would need to legally hold NextWave?s licenses, nor has the FCC promised to grant such waivers. It is well understood that such waivers could be obtained, if at all, only in accordance with administrative law procedures that are typically elaborate and lengthy."
"Not only would the FCC have to set aside Congressional intent to allow a large carrier to hold these licenses" NextWave?s spokesperson stated, "it also would have to find unique circumstances in order to waive multiple existing FCC rules and policy determinations, such as the unjust enrichment penalties and the prohibition of transfers of these licenses to otherwise ineligible applicants, that apply to ?Entrepreneur?s Block.?" In a recent press report, representatives of two large wireless carriers vowed to protect their interests and implied that they would challenge efforts to deliver spectrum solely to Nextel. This indicates that a lengthy regulatory and judicial battle would ensue if any waiver of FCC rules is sought.
NextWave?s reading of the materials attached to Nextel?s 8(k) filing is in concert with the statement made by Assistant U.S. Attorney Daniel Alter at last Friday?s U.S. Bankruptcy Court hearing, where NextWave?s motion for a TRO and injunction against Nextel was granted. "[T]he FCC has not granted any waivers or licenses and has not definitively confirmed a transfer of [NextWave?s] licenses to any party," said Mr. Alter.
The Bankruptcy Court?s order of last Friday provides that NextWave?s "PCS spectrum licenses are subject to the exclusive jurisdiction of this Court under and pursuant to [federal law], and such property cannot and will not be conveyed to or by any party without prior Court approval upon proper application, and any applicable regulatory approval, if any."
NextWave?s spokesperson noted that "NextWave has not been a party to the discussions between Nextel and the FCC, and so is not in a position to know the nature of those discussions or the intentions of the parties thereto. Nevertheless, there are striking factual similarities between recent events and those that occurred in the context of C block PCS spectrum licensee Pocket Communications, Inc., DCR PCS, Inc.?s (Pocket?s") bankruptcy proceeding. There, the FCC purported to negotiate with Pocket?s principal creditors while, in reality, the agency throughout those discussions was seeking legislation that would revoke the licenses and leave the creditors high and dry."
"Proposals that require waivers of FCC rules would force NextWave?s creditors and equity holders to risk losing everything while they wait for waivers to be filed and considered, objections by third parties overcome, and all appeals resolved," NextWave?s spokesperson said. "All the while, the FCC would continue to seek retroactive legislation that would strip bankruptcy courts of jurisdiction over the FCC and the licenses currently held by NextWave," said NextWave?s spokesperson." Just last week, FCC Chairman William Kennard sent a new proposal to Capitol Hill, asking Congress to "clarify" that provisions of the bankruptcy code do not apply to the type of small business spectrum licenses held by NextWave.
"NextWave will not take any action which endangers or encourages delay of confirmation. Our stakeholders are receiving full value for their claims under our plan of reorganization, as well as sharing in the upside of the business. We will not stray from protecting that value and our creditors? recoveries," the spokesperson concluded.
###
Media Contacts: Michael Wack, Charla Rath
NextWave Washington DC Office (202) 347-2771 |
