Following months of negotiations, Omnipoint Corp. secured much-needed financing from two of its
vendors and one unnamed investor.
Some analysts had speculated Omnipoint could run out of money sometime this
year in the absence of additional financing, and the company has been named as a potential acquisition
target.
Omnipoint in October said it was seeking new financing for up to $200 million from vendors Nortel
Networks and Ericsson Inc. Ericsson, however, has yet to put up any additional financing for Omnipoint. The latest
financing came from Nortel and Siemens Information and Communications Networks Inc.
The new financing will
total $375 million during the next year.
The first agreement, with an unnamed investor, is for an unsecured loan that
will give the company $125 million in cash to be used for general corporate purposes.
The agreement with Siemens
is for $200 million in long-term vendor financing of equipment and services as well as resources for general corporate
purposes available next year. Omnipoint said it will use Siemens’ D1900 system, including high capacity switches, base
stations and Siemens’ intelligent network product INXpress to expand in the New York region and build out other
markets.
The agreement is subject to final board approvals of both companies.
The other arrangement, with
Nortel, provides financing of up to $50 million in working capital, which Omnipoint said it will use to supplement its
existing operations across all of its regions.
The Nortel board approved an increase in its financial commitment of
both $50 million in new working capital and an acceleration of the availability of $42.5 million in an existing working
capital facility, said Omnipoint. Of the $92.5 million in working capital, $67.5 million is immediately available and $25
million is available upon Omnipoint’s signing a letter of intent with a strategic partner, said the company.
The three
arrangements each provide for further expansion under various conditions, said Omnipoint.
Omnipoint also said it
has made significant progress in discussions with potential strategic partners and is working with Lehman Brothers and
Allen & Co. to complete the process.
