NEW YORK-Teligent Inc. hopes to celebrate Thanksgiving in a major way, assuming its plans to hit the public capital markets big time before month’s end are realized.
The Vienna, Va., upstart, with big-name backing, plans to build a point-to-multipoint wireless network to compete with local wireline telephone companies and with other local wireless competitive local exchange carriers, like WinStar Communications Inc. for business customers. To do so, it needs money, of course.
If all goes as planned, Teligent will increase its available capital to more than $1.5 billion by the end of November with the concurrent sale of an initial public offering of 5.5 million shares and $400 million in 10-year debt securities, plus the infusion of $160 million in private equity and the availability of a $175 million bank line of credit. The public debt and equity offerings are contingent upon each other.
The IPO, planned for sale later this month in a price range of $19-$22 per share, would raise more than $100 million. Merrill Lynch & Co. and Salomon Brothers Inc., both headquartered in New York, are lead managing the Class A common stock initial offering, of which 4.4 million shares are planned for sale in the United States and Canada and the remaining 1.1 million shares abroad.
Alex J. Mandl, the former AT&T Corp. president who now is chief executive officer of Teligent, “has indicated his intention to buy up to $5 million of shares in the U.S. equity offering,” the preliminary prospectus for the IPO said.
In addition to, but contingent upon the planned public stock offering, three companies have pledged equity totaling $160 million: The Associated Group Inc., a 41-percent owner once Teligent goes public; Telecom Ventures L.L.C., which will be a 33-percent equity owner; and Nippon Telephone and Telegraph Corp., an 11-percent owner after the IPO.
The Associated Group also agreed to contribute to Teligent the business and operations of its wireless competitive access provider in Los Angeles, according to the red herring.
The two 10-year public debt issues planned for simultaneous sale with the IPO comprise $250 million in senior notes, of which $69 million will be placed in escrow to pay interest, and $150 million in senior discount notes. Additionally, Northern Telecom Inc. has committed to finance up to $780 million for Teligent’s network construction.
Teligent said it plans to begin Phase I deployment efforts late this year in Dallas, Los Angeles and Washington, D.C. Phase I, scheduled to be completed by mid-1998, “involves testing of equipment from multiple vendors, including Northern Telecom, Lucent Technologies Inc., P-Com Inc., Netro Inc. and Broadband Networks,” the preliminary offering statement said.
The carrier has 24 GHz fixed wireless licenses in 74 metropolitan areas. It anticipates building out its network in 10 markets next year, in 20 additional markets in 1999 and in 34 new markets by 2001. The company plans to offer voice, video, Internet and high-speed data services.
Teligent also is able to obtain a bank credit facility of up to $175 million, according to Moody’s Investors Service Inc., New York. The equipment vendor and bank financing would be senior in repayment order to the debt securities.
