NEW YORK-Advanced Radio Telecom Corp., a 38 GHz provider of wireless local loop service, announced Aug. 1 it had pulled a planned initial public offering of common stock and a concurrent debt issue.
“We are postponing both issues pending improved market conditions,” said Thomas A. Grina, chief financial officer of the company, known as ART, which is headquartered in Bellevue, Wash.
WinStar Communications Inc., a New York-based, 38 GHz wireless local loop services provider, also postponed an add-on common stock offering of 4 million shares due to poor market conditions last week. And PriCellular Corp., a New York-based cellular carrier, downsized its secondary stock offering before going to market.
ART planned to go public last week with an initial public offering of common stock in the share price range of $5.50 to $6.50, to be traded on Nasdaq under the symbol ARTT.
Concurrently, it expected to sell a $157 issue of 10-year senior discount notes, with warrants, according to a report released July 31 by Moody’s Investors Service, New York. The debt offering originally was anticipated to total $175 million, according to the preliminary prospectus. Montgomery Securities, San Francisco, was lead manager of the IPO. Merrill Lynch & Co. was lead underwriter for the debt issue.
Moody’s gave the debt issue a Caa speculative grade rating, which takes into account several factors, including “the business development potential of ART’s `wireless fiber’ product” and its strategic relationships with GTE Corp.(an installation and maintenance agreement) and Ameritech Corp. (a three-year distribution agreement).
However, among other things, Moody’s also cautioned “of the potential weakening of the current cost advantages of (ART’s) wireless service as landline fiber networks expand and local exchange markets become more competitive.”
ART last month entered into an agreement to acquire 129 38 GHz licenses from CommcoCCC Inc. Once these acquisitions are completed, Advanced Radio Telecom will own or manage 237 Federal Communications Commission authorizations covering a population of about 143 million in 169 markets, including 82 of the top 100.
ART, which began providing 38 GHz wireless broadband services late last year, has a footprint comprising 108 FCC authorizations that permit its operation in 89 markets.
Approximately $100 million of the net proceeds of the IPO and debt issue were earmarked for capital expenditures through year-end 1997. Nearly $10 million were planned for financing acquisition of spectrum rights. Another $8 million were to repay CommcoCCC notes and other short-term notes issued earlier this year as bridge financing. The remainder was intended for general corporate purposes, including funding operating cash flow shortfalls, for technology development and for acquisition of additional spectrum rights.
