WASHINGTON-In an effort to move closer to gaining the C-block personal communications services licenses it won last summer and to circumvent any talk of collusion, Dallas-based GWI PCS Inc. has stated in no uncertain terms that neither South Korean-based Hyundai Electronics nor its U.S. affiliate, Hyundai Electronics America, had anything to do with its bidding strategy, day-to-day business or financial status.

The company did admit that one of its directors contacted a director of C-block dropout

U. S. AirWaves Inc. as to Hyundai’s interest in funding another C-block player almost immediately upon AirWaves’ decision to exit the auction.

The Federal Communications Commission inquiry sought additional information regarding Hyundai’s relationship with GWI, how foreign ownership was calculated, when the two companies first met and Hyundai’s involvement with U.S. AirWaves. GWI’s place in the PCS arena has been in limbo following the filing of petitions to deny after the close of the C-block auction May 8. An FCC spokesman told RCR that a decision to award or deny licenses is expected before the end of the year, based on this completed record.

In Nov. 25 answers to more than 30 questions posed earlier that month by the FCC, GWI wrote that Norman Frost, a managing director for its top underwriter Bear Stearns, called U.S. AirWaves director Winston Himsworth on or about Feb. 16 (the day after AirWaves left the auction) about a possible Hyundai investment switch. On or about Feb. 17, Hyundai’s Dr. Youm Huh expressed interest, and then met with GWI President and Chief Executive Officer Roger Linquist Feb. 20 in Hyundai’s Milpitas, Calif., office. The two sketched out a potential $50 million, three-year relationship during this meeting, agreeing in principle not to discuss bidding strategies because of Hyundai’s former role on AirWaves’ auction board.

According to the document and its supporting supplements, GWI attorneys wrote that Hyundai will not make an investment in GWI until its licenses have been awarded; in light of this, the company was not included in the foreign-ownership calculation, now set at 21.9 percent. Current foreign shares owned by other concerns stand at 148,300, with a monetary value of $14.83 million. If and when GWI’s 14 licenses are released, Hyundai will be able to buy enough Class C common stock to bring foreign ownership up to the 25-percent cap. It also will receive a seat on the board.

The potential $30 million Hyundai Loan Agreement (dated March 15), when added to GWI’s existing $67 million in equity, brings the company’s debt: equity ratio to 0.75: 1, excluding the government’s funding of $1.058 billion in auction debt. If the Korean government does not approve the loan, Hyundai is liable for $1 million in contract kill fees.

As far as Hyundai’s involvement with the now-defunct U.S. AirWaves is concerned, the two first began talking on an investment level in April or May of 1995. Hyundai first bought $4.5 million shares in the bidder and then lent it $21 million on a short-term note. H.Y. Kim represented Hyundai on AirWaves’ auction board and had day-to-day knowledge of its bidding strategy; Hyundai has stated it did not reveal any of AirWaves’ tactics to GWI once talks began between the two of them.

When AirWaves sensed it was in trouble as auction prices started to rise in late 1995, Hyundai said it would up its ante to allow the company to continue its nationwide bidding strategy. Other backers refused, and AirWaves made its last bid Feb. 15.

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