WASHINGTON-Geotek Communications Inc. is moving forward to win creditor and bankruptcy court approval of a final plan of liquidation and is planning for contingencies in the event Nextel Communications Inc. loses its bid to overturn a 1995 antitrust consent decree.
The U.S. Court of Appeals for the District of Columbia Circuit June 14-17 will hold an evidentiary hearing on Nextel’s appeal. If more time is required, the case will resume on June 28.
In February, a Delaware bankruptcy court approved Nextel’s $150 million purchase of Geotek’s 191 900 MHz dispatch radio licenses. But the purchase asset agreement requires Nextel to get the 1995 consent decree removed this summer. That will be a tall order given the Justice Department’s opposition to its removal.
The decree bans Nextel, which as the No. 1 dispatch radio company controls much of the nation’s 800 MHz specialized mobile radio spectrum, from operating 900 MHz SMR systems in 14 of the largest U.S. markets.
Nextel, which argues that changed circumstances make the consent decree no longer applicable, needs more spectrum to satisfy growing customer demand. Nextel handsets have built-in dispatch, data messaging and mobile telephony features.
Small- and medium-size SMRs have joined Justice in urging the court to keep the decree intact as an anti-trust safeguard. Before it went into bankruptcy last year, Geotek was seen as a potentially formidable competitor to Nextel.
Mobex Communications Inc., a California SMR that was edged out by Nextel for Geotek’s 900 MHz licenses in a bankruptcy auction late last year, claims Nextel has violated the consent decree, and it should not be allowed to buy any of Geotek’s licenses.
Heavily leveraged Nextel, which broke off talks with MCI WorldCom Inc. about being acquired, also is seeking a waiver from the Federal Communications Commission to get private wireless spectrum reserved for internal communications systems used by industrial and land transportation entities.
Geotek debtors filed a first amended plan of liquidation with the U.S. Bankruptcy Court for the District of Delaware on April 9 in Wilmington. The debtor’s first amended disclosure statement was filed with the court on May 21. The court approved both at a May 28 hearing.
Now Geotek must secure approval of the liquidation plan and disclosure statement from creditors. The two groups have until July 14 to vote. The senior creditors include 15-percent note holders Merrill Lynch and S-L Rig-an investment group affiliated with Soros Trust Co. and the Chatterjee Group-and Hughes Network Systems Inc.
There are three contingencies in the Geotek-Nextel purchase asset agreement. If the court lifts the 1995 consent decree, Nextel would be free to own all 191 Geotek licenses. But the FCC would have to approve the transaction as well.
If the court rejects Nextel’s appeal, Nextel is obligated to purchase $19 million of Geotek licenses that are not subject to the antitrust consent decree. The remaining licenses would be licensed to Merrill Lynch, S-L Rig and Hughes.
If the court and FCC prohibit Nextel from holding any Geotek properties, 15-percent note holders and Hughes would get the 191 SMR licenses.
