Following the recent sale of its remaining spectrum licenses to Verizon Wireless for $3 billion, NextWave Telecom Inc. filed its third joint plan of reorganization with the bankruptcy court overseeing the company’s ongoing Chapter 11 bankruptcy proceedings. The filing provided information on NextWave’s financials and its plans to deploy a broadband network.
NextWave plans to pay its creditors in full, plus interest, and distribute remaining cash to equity holders using the more than $2.6 billion NextWave said it will have after paying off its liabilities and obligations. Each shareholder could receive as much as $7.20 per share.
Those equity holders will also have the right to receive either an additional cash distribution or an equity interest in NextWave’s new operating company, NextWave Broadband Inc., which plans to pursue broadband wireless opportunities.
NextWave noted key elements of the latest reorganization plan include the sale of its spectrum licenses to Verizon Wireless and accompanying $71.9 million payment to the Federal Communications Commission; an internal corporate restructuring that will consolidate NextWave’s remaining assets, which include MMDS spectrum holdings and ITFS spectrum leases, into the new NextWave Broadband; and converting NextWave Wireless Inc. into a limited liability company that will hold cash and all the stock of NextWave Broadband. A confirmation hearing for the latest reorganization plan is scheduled for Feb. 15.
“The plan is a testament to the company’s resolve and determination to pay its debts in full, to create significant value for shareholders, and to continue in its efforts to become a leading developer and provider of innovative broadband wireless services,” said NextWave Chairman and Chief Executive Officer Allen Salmasi.
In addition to the $3 billion raised from the sale of wireless licenses to Verizon Wireless last month, the reorganization plan shows that NextWave raised nearly $1 billion this summer through an auction of a handful of licenses and $1.4 billion earlier this year through the sale of 34 licenses to Cingular Wireless L.L.C. The company noted it received more than $1.2 billion in proceeds from the transactions after making payments to the FCC and bondholders.
NextWave originally bid more than $4.7 billion for spectrum licenses during FCC auctions in the mid-1990s before filing for bankruptcy protection and fighting a successful legal battle with the government over control of those licenses. The FCC attempted to re-auction those licenses in early 2001, generating more than $16 billion in bids before a circuit court ruled that the FCC’s attempt to repossess NextWave’s licenses while it was in bankruptcy protection was illegal.
NextWave noted last month that following the sale of its remaining 1.9 GHz spectrum licenses to Verizon Wireless, the carrier planned to focus its attention on launching an IP-based wireless broadband network. The company said it would use the network to serve commercial customers, network partners interested in leasing capacity on the network and government agencies.
In the latest filing, NextWave said it was testing prospective technologies in the Las Vegas area using 24 megahertz of Broadband Radio Service spectrum in the 2.5 GHz bands that the company acquired for $2.25 million earlier this year. NextWave noted that the network trial included nine multi-sectored base stations and back-haul equipment, and that it plans to use up to $39 million to build out the network with as many as 100 base stations.
NextWave said it will also be leasing 16.5 megahertz of BRS spectrum in the New York area, which it plans to use to conduct further trials in cooperation with Lockheed Martin. The spectrum leases were acquired for $12.7 million in a transfer between NextWave and IPWireless Inc. on Dec. 3. IPWireless has been rumored as one of the possible technology partners for NextWave’s wireless broadband service.
In an attempt to further the availability of devices to access the network, NextWave signed a $20 million deal with San Diego-based Cygnus Inc. to develop a multimedia gateway unit that NextWave said will provide customers with a single point of entry for broadband Internet access, Voice over Internet Protocol telephony and multimedia content.
As for its original plans to launch a wireless broadband network using the 1.9 GHz spectrum, NextWave noted that network continues to operate in 25 markets using 32 cell sites and a pair of network switches deployed through a deal with Lucent Technologies Inc. The network will be decommissioned once the deal with Verizon is completed.
