Rent collection, bankruptcy law, and the EM spectrum
From: sinister (sinister_at_nospam.invalid)
Date: 11/06/04
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Date: Sat, 06 Nov 2004 14:40:40 GMT
Excerpted from
http://www.washingtonpost.com/ac2/wp-dyn/A29600-2004Nov5?language=printer
(Deletions not marked as such.)
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Verizon Wireless announced yesterday that it plans to buy airwave licenses
in 23 markets from NextWave Telecom Inc. for $3 billion in cash, giving the
cellular phone giant the ability to carry more calls in some of the nation's
largest cities.
The sale agreement wraps up a long dispute over a set of licenses that
NextWave won after bidding $4.8 billion for the rights at a government
auction in 1996.
NextWave made a $500 million down payment to the government, but two years
it later filed for Chapter 11 bankruptcy protection because it could not
make more payments. After the FCC tried to take back the licenses, NextWave
fought in court to retain control, arguing that bankruptcy law shielded it
from the government's action. In January last year, the Supreme Court sided
with NextWave, and the company later reached a settlement with the FCC that
allowed the company to keep its most valuable licenses.
The FCC will receive payments totaling about $1.6 billion of NextWave's
original bid. As part of its deal with Verizon Wireless, NextWave said it
would pay an additional $71 million to the FCC.
NextWave previously returned some of its licenses in smaller markets to the
agency as part of the settlement. And last year, it sold licenses in 34
areas to Cingular Wireless for $1.4 billion and split the proceeds with the
FCC. In July, it sold licensed in metropolitan New York to Verizon Wireless
for $930 million, plus two more licenses in Florida to Metro PCS for $43.5
million.
The company has already collected nearly $5 billion from the license sales,
and it will be able to pay its shareholders as well as fund its new
business.
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