WASHINGTON-NextWave Telecom Inc. filed an amended S-1 registration statement Feb. 3 with the Securities and Exchange Commission in hopes of jumpstarting its halted initial public offering that had been planned for last summer.
Underwriters for the offering include Smith Barney Inc.; Bear, Stearns & Co. Inc.; Lehman Brothers; Prudential Securities Inc.; ING Barings; and Oppenheimer & Co. Inc. The company also submitted amended paperwork at the SEC last Friday for a sister debt offering.
NextWave’s original S-1, filed in June 1996, was for a $300 million IPO; the debt offering would have totaled $400 million. The amended equity S-1 offers an unspecified number of Series B common shares for sale at an unspecified price.
In addition, the company will offer investors one contingent transfer right (CTR) per share of Class B stock that would give shareholders additional stock in 2000 if NextWave’s shares were not performing to a date-certain number. It is unknown at this time how much the offering could raise or how much the rate of return could be.
“Each CTR will entitle the holder to receive from the company under certain circumstances a share (or fraction thereof) of Series B common stock backed upon the average fair market value (as defined) of the stock for the 60-trading-day period ending on the fifth trading day prior to [an unspecified date], 2000,” the document read.
NextWave conditionally was awarded its 56 C-block personal communications services licenses last month; it has six months to restructure its foreign ownership to the FCC’s satisfaction. The company also won 32 licenses in the recently concluded D-, E- and F-block PCS auction; no licenses in that sector have been granted yet.
To date, NextWave has commitments of some $1.4 billion in vendor financing from such companies as LGIC, Comdisco, Hughes Corp., Lucent Technologies Inc. and The Allen Group in addition to about $600 million in private funds. It also reported losses of $14.6 million as of Sept. 30.
The company estimated that $1.1 billion will be needed for “acquisition, development, construction and deployment of PCS networks … through Dec. 31, 1997.”
NextWave said it will use the proceeds of this offering to run the company through the first quarter of 1998, at which time additional public or private debt and/or equity financing will be needed.
The company plans to pay down a $25 million promissory note and will redeem certain convertible senior subordinated notes.
NextWave, which plans to be a “carrier’s carrier,” to date has put much of its minutes-of-use eggs in one basket with its contract with MCI Communications Corp. It also has contracts with five other unnamed carriers.
NextWave said that market forces could hamper such existing agreements and those of future contracts, and that MCI has nothing in its contract designating how many minutes-of-use per year it must buy.
In addition, if NextWave cannot provide what it calls “full mobility” to at least 70 million pops by Dec. 1, 2001, MCI can walk.
“At any time, MCI may terminate network services in a market if such a market fails to meet certain service, quality and capacity requirements,” the S-1 clarified.
MCI also has warrants to acquire up to 12 percent of NextWave if it so desires.
If NextWave cannot negotiate enough contracts as a reseller to become viable, its fallback position is to move into the retail arena, a move that will put the company even more in debt.
None of the risk factors listed by NextWave in its original filing were changed much in the amended S-1; it did have to add a paragraph regarding the restructuring of the foreign ownership and its timetable to comply. As part of its deal with the commission, NextWave is required to submit a monthly progress report on the restructuring. However, on Jan. 31, NextWave attorneys wrote a letter to Sandra Danner, acting deputy chief of the Commercial Mobile Radio Service Division of the Wireless Telecommunications Bureau, confirming its request to be excused until Feb. 17 from filing its first report, due to the fact that the official text on NextWave’s conditional licensing has not yet been released by the commission.
