Leap Wireless International Inc. reported that the Federal Communications Commission issued an order approving the change of control of its wireless licenses, which will clear the way for the carrier to emerge from Chapter 11 bankruptcy protection later this month with its debt load reduced from more than $2.4 billion to $390 million.
As part of the order, the FCC denied Leap’s request for a waiver of certain FCC regulations relating to Leap’s status as a designated entity following its emergence from bankruptcy protection. In addition, Leap will pay $45.2 million to the federal government for unpaid principal, accrued interest and “unjust enrichment penalties” in connection with the reinstatement of Leap’s FCC debt.
Leap added that as a result of the FCC’s order, it will continue to own all of its existing licenses upon its emergence from bankruptcy except for nine licenses that it will transfer to the Leap Creditor Trust as part of its plan of reorganization. Those licenses include Bemidji and Brainerd, Minn.; Bozeman, Mont.; Casper, Wyo.; Escanaba, Mich.; Lewiston-Moscow, Idaho; Pueblo, Colo.; Redding, Calif.; and Salem, Ore. Leap noted that its Pueblo and Salem operations would not be affected by the license transfer.
“We are grateful to the FCC staff for the extraordinary effort that helped us reach this settlement agreement,” said Rob Irving, senior vice president and general counsel for Leap. “We expect that the company’s loss of its designated entity status will not have a material impact on our business now that we have grown to be a major wireless carrier with more than 1.5 million customers.”
As part of its emergence from bankruptcy, Leap said all of its outstanding common stock, warrants and options will be cancelled with no distribution made to existing holders. The company said it would issue new shares of common stock to two classes of the company’s creditors, and it expects the new securities to be quoted on the OTC Bulletin Board under a new ticker symbol.
Leap’s stock was trading down 50 percent early Friday at 0.5 cent per share.
