Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Winstar Comm. (WCII) -- Ignore unavailable to you. Want to Upgrade?

To: David Krafcsik who wrote (8695)	10/14/1998 2:42:00 PM
From: Pamela Murray	Read Replies (1) \| Respond to of 12468

I don't recall seeing this, my apologies if I am repetitious: LMDS Pioneer Defaults on Two Loans By MIKE FARRELL October 12, 1998 CellularVision USA Inc., which pioneered a wireless-communications system known as local multipoint distribution service, has defaulted on two loans that could end up costing the firm nearly $10 million. According to documents filed with the U.S. Securities and Exchange Commission, Brooklyn, N.Y.-based CellularVision said it failed to make a $271,200 bond-interest payment due Sept. 30 to Morgan Guaranty Trust Co. of New York, as well as a $366,457 promissory-note payment to Metromedia Fiber Network. Failing to pay the interest on the Morgan Guaranty bonds gives the investment bank the option to demand full payment of the outstanding principal of $6.03 million, the $271,200 in overdue interest and penalty interest of 8 percent above the prime rate. Officials at Morgan Guaranty declined to comment on the status of the bonds. Shant Hovnanian, CellularVision's chairman and CEO, did not return phone calls seeking comment. As a result of the failure to pay the MFN loan, CellularVision is also in default of the terms of a $3.5 million loan made to the company by WinStar Communications Inc. That default gives WinStar the right to demand payment in full. WinStar has not informed CellularVision of any intention to call on the loan. And the company also dodged another bullet when it received a 10-day reprieve from WinStar concerning the spectrum sale. CellularVision said in the SEC filing that it would not be able to meet an Oct. 10 deadline regarding shareholder approval of the WinStar spectrum sale. As a result, WinStar could have terminated the deal. However, Gary Holmes, a spokesman for WinStar, said the company has granted CellularVision a 10-day extension to obtain shareholder approval, until Oct. 20. "Our expectation is that they will get approval in that time," Holmes said. The extension of that deadline also allows CellularVision to take advantage of another $2 million loan from WinStar, which was to take effect after shareholder approval was received. Although CellularVision appears to have a little breathing room at the moment, some analysts believe that the SEC filing is an indication of its inevitable decline. Larry Swasey, senior wireless analyst for Allied Business Intelligence, an Oyster Bay, N.Y.-based market-research company, said the handwriting was on the wall for CellularVision back in July, when it agreed to sell the bulk of its wireless spectrum to WinStar for $32.5 million. "Now, they have defaulted on their loans, and they've indicated that they won't go forward with their satellite-delivery system," Swasey said. "Those are all indications that the company most likely will not be a player in delivery technologies." Although Swasey is a believer in LMDS -- the high-frequency radio-based technology has been touted as an excellent delivery system for high-speed-data and telephony services -- he added that CellularVision's saga was a perfect example of a company being a little bit ahead of its time. "CellularVision had a great vision," Swasey said. "But they were a little nearsighted as to when that vision would come true. It appears that anyone looking to use LMDS as their ticket this year probably won't do well." --------------------------------------------------------------------------------