WASHINGTON-According to company spokeswoman Jennifer Walsh, NextWave Telecom Inc. plans to amend its current S-1 filing at the Securities and Exchange Commission soon to get its stalled initial public offering off the ground. On Jan. 20, news agency Reuters America Inc. quoted a source close to the company as saying the filing could occur within the next couple of weeks.
The C-block winner will use Smith Barney Inc. and Lehman Brothers to manage its $200 million equity offering. The other half of the deal, a $300 million debt offering, will be handled by CIBC Wood Gundy. But Walsh was careful to say, “Don’t start counting off 14 days on the calendar.”
The company technically is not in the traditional “quiet period” that precedes an IPO; because its June 1996 S-1 is out of date, NextWave is not held on a tight intelligence rein. Still, NextWave is careful about what information it chooses to disseminate and by whom. But once new paperwork is submitted, the box will snap shut.
Since the conditional issuance of NextWave’s licenses Jan. 3, the company has been trying to downplay articles contained in both this newspaper and in The New York Times regarding its foreign-ownership problems and its status as a highly leveraged entity with little or no collateral and has been working to plant the seeds of more favorable stories with consumer and trade journalists.
NextWave currently is in the process of restructuring its foreign ownership, which the Wireless Telecommunications Bureau of the Federal Communications Commission has pegged at between 30 percent and 35 percent, down to less than 25 percent, the legal limit. Two weeks ago, NextWave admitted to having a 28-percent foreign-ownership stake, although Reuters was told that off-shore interests only hold 22 percent of the company.
NextWave also has incurred a staggering amount of debt in its quest to gain enough personal communications services licenses to cover the country-$4.7 billion, payable during the next 10 years. It will cost at least that much again to build out its “carrier’s carrier” network. The combination of these figures has made many on Wall Street stop and think; indeed, it is purported to be one of the main reasons NextWave’s original IPO never flew.
Reuters’ unnamed source said NextWave has enough cash from such companies as Lucent Technologies Inc. and Hughes Network Systems Inc., and through some “conditional vendor financing,” which probably includes Code Division Multiple Access proponent Qualcomm Inc., to build its network. The source also pointed to MCI Communications Corp.’s contract with NextWave for 10 billion minutes of use as a sign that the company’s business plan was healthy, even though MCI and 20 others have not forwarded any cash as yet.
