SAN DIEGO-Leap Wireless International Inc. said it ceased support of two Russian operations in which it holds noncontrolling minority interests.
According to Leap, the boards of directors of Transworld Companies, a group of companies that have been trying to establish a domestic long-distance business in Russia, have voted to liquidate the company and distribute its assets to shareholders. Transworld considered several alternate business plans, but decided it could not meet minimum financial performance criteria, in part due to Russia’s troubled economy.
Leap also ceased funding its loans to Metrosvyaz, a company that is attempting to establish joint ventures in Russia to operate wireless local loop services. The company said Metrosvyaz has not satisfied certain conditions required for funding and is in default under its loan agreement.
Leap said it also has been prevented from securing full reporting and documentation of performance, results and expenditures of Metrosvyaz, and that it has found serious financial irregularities in the documentation it has been allowed to see, including unaccounted-for funds and questionable contracts and payments. As a result, Leap has initiated arbitration seeking a full accounting of damages from Metrosvyaz and one of its directors.
Through holding companies, Leap indirectly owns 35 percent of Metrosvyaz and 21 percent of Transworld.
Leap said the two events were unrelated and will result in write-offs of about $17.7 million for Transworld and $9.6 million for Metrosvyaz.
In connection with the announcements, Qualcomm Inc., which spun off Leap, said it is evaluating whether there is permanent impairment to its assets of about $50 million related to the Metrosvyaz venture. The determination could result in a one-time write down in the fourth fiscal quarter, said Qualcomm.
