SAN DIEGO-Leap Wireless International Inc. issued approximately 21 million shares of common stock to MCG PCS Inc. as ordered by an arbitrator as part of a purchase price adjustment for wireless licenses Leap acquired from MCG in Syracuse and Buffalo, N.Y.
Leap reiterated that because it did not have time to seek shareholder approval for the issuance, which effectively gives MCG around 35-percent control of Leap, it may face delisting from the Nasdaq national market. Leap also said it has chosen not to pay interest on loans under certain credit facilities as some lenders have stopped funding requests for loans that Leap would have used to cover interest payments.
Leap noted the stock issuance and failure to pay interest constitute events of default under the credit facilities, which provides its lenders with the right to declare their existing loans to be due and payable.
To help the company secure additional funding, Leap previously said it has hired UBS Warburg to explore new sources of financing and a restructuring of the company’s outstanding debt.
Leap’s stock was down more than 27 percent in early Friday to 29 cents per share.
