Yesterday, they put out a pr on how they were going to emerge from chapter 11 bankruptcy into a very low cost stable company. Today the thing plummets 70% from .095 to .003. This could be an enormous bounce play. I going to do some dd, but lets get some info on this one.Leap Announces FCC Has Issued Order Approving the Change of Control of Its Wireless Licenses
08-05-04 09:35 PM EST | SAN DIEGO --(BUSINESS WIRE)--
FCC Approval Clears the Path for Leap's Emergence From Chapter 11; Company Expects Plan of Reorganization to Become Effective Week of August 16th
Leap Wireless International, Inc. (OTCBB:LWINQ), a leading provider of innovative and value-driven wireless communications services, today announced that the Federal Communications Commission (FCC) has issued an order approving the change of control of its wireless licenses, clearing the way for the Company's emergence from Chapter 11. The Company expects to emerge from bankruptcy during the week of August 16, 2004 as a strong, stable company with one of the lowest cost structures in the industry and with a differentiated service offering that meets the needs of the value-conscious segments of the marketplace.
"Obtaining the FCC's order approving the transfer of control of our licenses represents a significant milestone in our emergence process," said Bill Freeman, chief executive officer of Leap. "Our progress during this restructuring is the result of the hard work and perseverance of our employees across the nation, whose continued focus on cost management and improvements to our cash flow has created a strong foundation for our business. I would also like to thank our customers who have shown their support by continuing to purchase Cricket(R) wireless service throughout this process. We look forward to our emergence and to the continued provision of innovative, value-driven wireless communications to our customers across the country."
Upon the Company's emergence from bankruptcy, its long-term debt will be reduced from more than $2.4 billion to approximately $390 million. All of the issued and outstanding common stock, warrants and options of Leap will be cancelled on the effective date of the Company's Plan of Reorganization, and no distribution will be made to existing stock, option or warrant holders. The Company will issue new shares of common stock on the day it emerges to two classes of the Company's creditors. The Company expects that these securities will be quoted for trading on the OTC Bulletin Board under a new ticker symbol shortly after its emergence.
In its order approving the change of control of the Company's wireless licenses, the FCC denied Leap's request for a waiver of certain FCC regulations relating to Leap's status as a "designated entity," effectively determining that Leap would not be a "small business" or "very small business" following its emergence from bankruptcy. As a result of the FCC's order, and a concurrent settlement agreement with the FCC, the Company will pay approximately $45.2 million to the federal government on the effective date of the Plan of Reorganization for unpaid principal, accrued interest and unjust enrichment penalties in connection with the reinstatement of the Company's FCC debt. The settlement agreement requires the Company to repay approximately $40 million in remaining principal, plus accrued interest, to the federal government in installments scheduled for April and July 2005. The Company also agreed in the settlement agreement to use reasonable efforts to complete a debt offering on or prior to January 31, 2005, and to prepay the Company's indebtedness to the federal government with the net proceeds of any debt offering to the extent such proceeds exceed the amount necessary to redeem the $350 million of senior secured pay-in-kind notes that the Company's primary operating subsidiary, Cricket Communications, Inc., will issue upon its emergence from bankruptcy. As a result of the FCC's order, the Company will continue to own all of its existing licenses upon its emergence from bankruptcy except for the nine licenses that Leap will transfer to the Leap Creditor Trust as contemplated in the Plan of Reorganization. While the FCC's order is effective upon its release, parties may appeal or seek reconsideration of the order until September 14, 2004.
"We are grateful to the FCC staff for their extraordinary effort that helped us reach this settlement agreement," said Rob Irving, senior vice president and general counsel for Leap. "When the FCC originally set aside certain portions of available spectrum for `designated entities', it intended to foster competition within the wireless marketplace -- competition that we have helped deliver. 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."
The full text of the Company's Fifth Amended Joint Plan of Reorganization, and other documents related to the Company's Chapter 11 proceedings, can be found under the Restructuring Overview/Legal Documents section of the Company's website, www.leapwireless.com.
About Leap
Leap, headquartered in San Diego, is a customer-focused company providing innovative mobile wireless services that are targeted to meet the needs of customers under-served by traditional communications companies. With a commitment to predictability, simplicity and value as the foundation of our business, Leap pioneered Cricket(R) service, a simple and affordable wireless alternative to traditional landline service. Cricket(R) service offers customers unlimited anytime minutes within the Cricket(R) calling area over a high-quality, all-digital CDMA network. Cricket(R) service is available to customers in 39 markets in 20 states stretching from New York to California. For more information, please visit www.leapwireless.com.
Except for the historical information contained herein, this news release contains "forward-looking statements" reflecting management's current forecast of certain aspects of Leap's future. Some forward-looking statements can be identified by forward-looking words such as "believe," "think," "may," "could," "will," "estimate," "continue," "anticipate," "intend," "seek," "plan," "expect," "should," "would" and similar expressions. This news release is based on current information, which we have assessed but which by its nature is dynamic and subject to rapid and even abrupt changes. Our actual results could differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with our business. Factors that could cause actual results to differ include, but are not limited to:
-- limitations on our ability to predict the future performance and actions of Leap because we will have new stockholders and a new Board of Directors of Leap if and when we emerge from bankruptcy, and they may implement changes in the direction of our business that could cause actual results to differ materially from those anticipated or implied in our forward-looking statements;
-- our ability to successfully implement our Fifth Amended Joint Plan of Reorganization dated as of July 30, 2003, including certain technical amendments thereto, referred to herein as the Plan of Reorganization, which has been confirmed by the United States Bankruptcy Court for the Southern District of California, or the Bankruptcy Court;
-- our ability to continue as a going concern;
-- our ability to obtain Bankruptcy Court approval with respect to motions prosecuted by us in our Chapter 11 cases from time to time;
-- risks associated with third parties seeking and obtaining Bankruptcy Court approval to convert the Chapter 11 cases of Leap, Cricket and substantially all of their subsidiaries to Chapter 7 cases if our Plan of Reorganization does not become effective in a timely fashion;
-- the potential continuing adverse impacts of the Chapter 11 cases on the liquidity or results of operations of Leap and Cricket and on our ability to predict future customer growth and other key operating metrics;
-- our ability to attract and retain customers in an extremely competitive marketplace;
-- our ability to attract, motivate and/or retain an experienced workforce;
-- changes in economic conditions that could adversely affect the market for wireless services;
-- rulings or actions by courts or the FCC adversely affecting our rights to own and/or operate certain wireless licenses;
-- failure of network systems to perform according to expectations;
-- global political unrest, including the threat or occurrence of war or acts of terrorism; and
-- other factors detailed in the section titled "Risk Factors" included in our Quarterly Report on Form 10-Q for the three months ended March 31, 2004 and in our other SEC filings.
The forward-looking statements should be considered in the context of these risk factors. Investors and prospective investors are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Leap and the Leap logo design are trademarks of Leap Wireless International, Inc. Cricket and Comfortable Wireless are registered trademarks of Cricket Communications, Inc. Cricket +1, Cricket +2, Cricket Unlimited and Cricket Multi Value Plan are trademarks of Cricket Communications, Inc.
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