WASHINGTON-Cook Inlet/VoiceStream bid $195 million for 12 licenses owned by a Pocket Communications Inc. subsidiary in a private bidding war with Leap Wireless International Inc. However, Cook only expects to keep a few of the licenses, selling the others to Leap.
On a separate front surrounding bankrupt C-block carriers, the Supreme Court refused to hear NextWave Telecom Inc.’s appeal to keep its personal communications services licenses.
Leap in August offered to pay $132.8 million in cash and stock for the Pocket licenses, but the offer was subject to higher and better offers. Cook Inlet offered $138 million, thus prompting the private auction.
Morrison and Foerster, one of the law firms representing Pocket’s debtors-in-possession, invited Leap and Cook Inlet to their offices here last Thursday to hold the auction.
The two sides went back and forth for several hours, said Kenneth W. Irvin, a Morrison and Foerster attorney who represents Siemens Information and Communications Network Inc., one of the DiP lenders. The other DiP lenders are L.M. Ericsson, Pacific Eagle Investments Ltd. and Masa Telecom Asia Investment.
The DiP lenders finally accepted Cook Inlet/VoiceStream’s all-cash bid of $195 million, even though Leap had a higher bid-including stock-on the table.
Irvin said the estate chose the Cook Inlet bid because it determined an all-cash bid was superior to a cash and stock bid due to the transaction costs involved in transferring stock.
The Cook Inlet bid will be evaluated today by the judge overseeing the case and Irvin expects him to confirm the sale of the Pocket licenses to Cook Inlet.
All is not lost for Leap, however.
Apparently, after the Pocket estate closed the auction, Leap and Cook Inlet made a side agreement that allowed Cook Inlet to keep the Las Vegas and New Orleans markets (including one license near New Orleans). Leap got the rest of the markets.
Both Leap and VoiceStream, which are headquartered on the West Coast, said they could not respond by press time because their representatives were in route back to the West Coast.
Supreme Court refuses NextWave appeal
In a separate matter, the U.S. Supreme Court let stand without comment a ruling from the U.S. Court of Appeals for the 2nd Circuit that said communications law trumped bankruptcy law.
NextWave had asked the Supreme Court to review the decision, which led the Federal Communications Commission to announce that NextWave’s 90 PCS licenses had canceled and would be re-auctioned. That re-auction is scheduled for Dec. 12. (A list of licenses and markets follows on pages 26 and 28 of this issue.)
NextWave said it wasn’t surprised with the Supreme Court decision because the 2nd Circuit ruled it should pay the full bid amount ($4.7 billion) rather than the bankruptcy-court reduced amount (just over $1 billion) “which NextWave is prepared to and has previously offered to do. The court may have concluded that, in a practical sense, there was no issue for it to resolve.”
Notwithstanding a decision by the nation’s highest court, NextWave said the litigation surrounding its licenses was “in its early stages … To ensure that a uniform policy ultimately is applied in every case, the FCC should not re-auction any of the licenses involved until all of the litigation is final.”
Perhaps for this reason, FCC Chairman William Kennard released a statement saying, “This is another chapter closed.” Kennard vowed to move forward with the Dec. 12 auction.
