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NextWave Wireless Announces Extension of Debt Maturities, Secures Ability to Access up to $37.5 Million of New Capital
NextWave Wireless Inc. (NASDAQ: WAVE) today announced that it has entered into an Amendment and Limited Waiver (the “Amendment”) to its first, second and third lien note agreements. The Amendment received unanimous note holder approval.
The Amendment extends the maturity date of the Company’s senior secured first lien notes (“first lien notes”) to July 17, 2011, with an additional extension to October 17, 2011 if certain conditions are met, including the pendency of asset sales sufficient to repay all outstanding first lien notes. The Amendment also extends the maturity date of the Company’s senior-subordinated secured second lien notes (“second lien notes”) to November 30, 2011. The maturity date of the Company’s third lien subordinated secured convertible notes (“third lien notes”) remains at December 31, 2011.
In connection with the Amendment, affiliates of certain existing first lien lenders have also committed to provide up to $25 million in new financing through the issuance of additional first lien notes with the same interest rate, maturity, security and additional terms as the existing first lien notes (the “incremental facility”). Funding under the incremental facility remains subject to customary conditions including the accuracy of representations made by NextWave.
After the redemption of approximately 30% of the first lien notes, and the repayment of any borrowings under the new $25 million incremental facility, the Amendment permits the Company to retain up to $37.5 million from the proceeds of future assets sales to fund operations (the “proceeds retention basket”). Under the terms of the Amendment, the proceeds retention basket will be reduced by any amounts borrowed under the incremental facility, providing the Company access to a maximum aggregate of $37.5 million of capital under the combination of the incremental facility and the proceeds retention basket.
To preserve the Company’s cash resources, the Amendment eliminates the requirement of cash pay interest, and allows the Company the option to make future interest payments in-kind through the issuance of additional notes. Under the Amendment, the interest payable on the first and second lien notes has been increased to a rate of 15% per annum. Additionally, interest is now payable on the third lien notes at a rate of 12% per annum initially, increasing 1% per annum on each of December 31, 2010, March 30, 2011, June 30, 2011 and September 30, 2011 to a maximum of 16%. In connection with the Amendment, note holders will be paid a 2.5% fee, payable by the issuance of an aggregate of approximately $21.4 million of new notes.
“We believe this strategic step is another indicator of the confidence our note holders have in NextWave’s business opportunities, the value of our global wireless spectrum portfolio and the operations of our PacketVideo subsidiary, the global leader in multimedia software for mobile devices,” said James Brailean, President and CEO.
The Company was advised by Moelis & Company in connection with the debt maturity extension. Moelis & Company will continue to assist the Company in evaluating strategic alternatives.
About NextWave Wireless
