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Powerwave files for bankruptcy, continues operations

Wireless infrastructure provider Powerwave Technologies is expected to receive a judge’s approval for the ability to use some of its cash to continue operations today, after declaring chapter 11 bankruptcy on Jan. 28. The money should allow the company to continue operations through Feb. 22.

The company, which supplies wireless infrastructure including distributed antenna systems, claimed in filings with the U.S. Bankruptcy Court for the District of Delaware that it had assets of about $213 million and total debts of $396 million.

The company had requested the ability to pay its 226 employees as well as additional money to continue operations, such as paying some of its shipping partners so that it could receive goods and continue operations. The Gores Group’s affiliate P-Wave Holdings, which extended a $50 million secured credit arrangement to Powerwave last September and immediately advanced $35 million of that to the company, objected to the company’s bankruptcy budget, calling it “totally unreasonable in [Powerwave’s] current state, in which the [company] has effectively ceased operations and is devoting its efforts to marketing itself and collecting accounts receivable that are P-Wave’s collateral, totally funded by P-Wave’s cash collateral.”

P-Wave said in its filings that it had been trying to reach an agreement with Powerwave since Jan. 15, while the company has been trying to sell its assets – including a substantial patent portfolio – for more than two months and continued to use up its credit account on a budget that P-Wave felt was too expensive for the company’s weakened state. P-Wave said in filings that it sent a default notice to Powerwave on Jan. 24, and terminated the company’s access to cash, then pulled approximately $8.3 million out of Powerwave’s accounts, which drove the company from a planned out-of-court restructuring into filing bankruptcy. P-Wave returned some of the cash, but applied $5 million of it to Powerwave’s $35 million debt balance, against Powerwave’s protests.

Eventually the two companies were able to reach on agreement on Powerwave’s use of cash during its bankruptcy and adequate protection of P-Wave’s investment, and Judge Mary Walrath is expected to approve the agreement today to allow Powerwave to continue to operate through Feb. 22, at which point the company must come back to court, according to court documents and press reports.

Powerwave’s third quarter 2012 financial reports showed a net loss of $52.7 million for the period, compared with a loss of $35.1 million in the same period during 2011. Net sales fell year-over-year from $77.1 million to $42.1 million.





Kelly Hill
Kelly Hill
Kelly reports on network test and measurement, as well as the use of big data and analytics. She first covered the wireless industry for RCR Wireless News in 2005, focusing on carriers and mobile virtual network operators, then took a few years’ hiatus and returned to RCR Wireless News to write about heterogeneous networks and network infrastructure. Kelly is an Ohio native with a masters degree in journalism from the University of California, Berkeley, where she focused on science writing and multimedia. She has written for the San Francisco Chronicle, The Oregonian and The Canton Repository. Follow her on Twitter: @khillrcr

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