SAN DIEGO--(BUSINESS WIRE)--NextWave Wireless Inc. (OTCQB: WAVE) (the “Company” or “NextWave”) today announced that it has entered into an agreement with the holders of its secured notes pursuant to which such holders will forbear from exercising their respective rights and remedies in connection with the Company’s failure or anticipated failure to pay amounts coming due under the agreements relating to each class of notes. Absent other defaults by the Company, the forbearance agreement will provide the Company until September 30, 2011 to complete a refinancing transaction. The forbearance agreement will be described in detail in NextWave’s Current Report on Form 8-K to be filed with the Securities and Exchange Commission today.
NextWave’s Senior Secured Notes (the “First Lien Notes”), having an aggregate principal amount of $129 million at June 30, 2011, matured on July 17, 2011, and the holders of such notes provided a limited waiver of the Company’s obligation to pay such notes in full pending completion of the forbearance agreement on August 1, 2011. In addition, NextWave’s Senior-Subordinated Secured Second Lien Notes due 2011 (the “Second Lien Notes”), having an aggregate principal amount of $179 million at June 30, 2011, will mature in November 2011 and its Senior-Subordinated Secured Third Lien Notes due 2011 (the “Third Lien Notes”), having an aggregate principal amount of $640 million at June 30, 2011, will mature in December 2011. As previously disclosed, NextWave’s cash reserves are not sufficient to meet these payment obligations.
The Company has been engaged in discussions with the holders of its secured notes relating to a maturity extension and related amendments to its notes agreements since January 2011. The holders of NextWave’s notes have not agreed to a maturity extension. An independent committee of the Company’s Board of Directors has authorized its financial advisor to seek alternative sources of financing to repay the Senior Notes and Second Lien Notes. At this time, alternative financing has not been identified and cannot be assured. The forbearance agreement contemplates that NextWave will meet certain milestones in an offering of new senior notes for net proceeds of at least $380 million by specified dates. If such milestones are not achieved, the forbearance agreement is subject to termination prior to September 30, 2011. If a refinancing transaction is completed, the Company has agreed to redeem its First Lien Notes, Second Lien Notes and $25 million of its Third Lien Notes using the proceeds of such transaction. If such Third Lien Notes redemption is completed, the holders of the Company’s Third Lien Notes have agreed to exchange their remaining notes for a new class of second lien notes with a maturity date six months after the maturity date of the new senior notes.
Inability to obtain a refinancing transaction, maturity extension or other accommodation from NextWave’s noteholders during the term of the forbearance agreement would significantly restrict the Company’s ability to operate and could cause it to seek relief through a filing in the United States Bankruptcy Court. Any alternative financing and/or maturity extension of NextWave’s notes may be costly to obtain, and could involve the issuance of equity securities that could cause significant dilution to its existing stockholders.
About NextWave Wireless Inc.
NextWave Wireless Inc. is a wireless technology company that manages and maintains worldwide wireless spectrum licenses.
Additional Information
This press release contains forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. There can be no assurances that forward-looking statements will be achieved. Actual events or results could differ materially from the events or results predicted by such statements. Important factors that could cause actual events or results to differ materially are discussed in greater detail in the filings of NextWave with the Securities and Exchange Commission (“SEC”). All such documents are available through the SEC’s website at www.sec.gov. NextWave makes no commitment to update any forward-looking statements in order to reflect subsequent changes in events or circumstances except as may be required pursuant to applicable law.
This press release shall not be deemed an offering of NextWave new senior notes, second lien notes, or any other security which may be issued by NextWave in any refinancing transaction. Any such offer will involve securities that will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.