UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 2, 2009
NEXTWAVE WIRELESS INC.
(Exact name of registrant as specified in its charter)
Delaware 000-51958 20-5361360
(State or other jurisdiction (Commission (I.R.S. employer
of incorporation) file number) identification no.)
13050 Science Center Drive, Suite 210
San Diego, California 92121
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code:(858) 731-5300
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On July 2, 2009 (the "Closing Date"), NextWave Wireless Inc. (the
"Company") and NextWave Wireless LLC, a wholly-owned subsidiary of the Company
("NextWave LLC") entered into agreements pursuant to which NextWave LLC issued
additional Senior-Subordinated Secured Second Lien Notes due 2010 (the
"Incremental Notes") in the aggregate principal amount of $15,000,000, on the
same financial and other terms applicable to NextWave LLC's existing
Senior-Subordinated Secured Second Lien Notes due 2010 (together with the
Incremental Notes, the "Second Lien Notes"), as described in more detail below.
Also on the Closing Date, the Company issued warrants to purchase shares of its
common stock, par value $0.001 per share (the "Common Stock") to the purchaser
of the Incremental Notes. The issuances of the Incremental Notes and Warrants
are referred to collectively as the "Financing Transactions."
Incremental Notes
In connection with the issuance of the Incremental Notes, the Company
entered into a Second Lien Incremental Indebtedness Agreement, dated as of the
Closing Date (the "Incremental Purchase Agreement"), among the Company, as
parent guarantor, NextWave LLC, as issuer, NextWave Broadband Inc., NW Spectrum
Co., AWS Wireless Inc. and WCS Wireless License Subsidiary, LLC, as subsidiary
guarantors (in such capacity, together with the Company, collectively, the
"Guarantors"), the note purchaser party thereto (the "Incremental Purchaser"),
and acknowledged by The Bank of New York Mellon, as collateral agent. The
Incremental Purchaser was Avenue AIV US, L.P., an affiliate of Avenue Capital
Management II, L.P. ("Avenue Capital"). The Incremental Purchase Agreement
amends the existing purchase agreement for the Second Lien Notes (the "Second
Lien Purchase Agreement"), originally described in the Company's Current Report
on Form 8-K filed with the SEC on October 7, 2008, solely by increasing the
outstanding indebtedness thereunder by the aggregate face value of the
Incremental Notes.
The Incremental Notes are governed by the terms of the Purchase
Agreement and the Second Lien Purchase Agreement and constitute "Notes" as
defined in the Second Lien Purchase Agreement. Robert Symington, a Senior
Portfolio Manager with Avenue Capital, is a member of the Board of Directors of
the Company. Avenue Capital-managed funds hold approximately $107 million in
principal amount of the First Lien Notes, representing approximately 50% of such
indebtedness and approximately $79 million in principal amount of the existing
Second Lien Notes (prior to issuance of the Incremental Notes), representing
approximately 75% of such indebtedness. The Board of Directors of the Company,
without the participation of Mr. Symington, reviewed and approved the terms of
the Financing Transactions. The Board of Directors received an opinion from a
qualified independent financial advisor that the economic terms of the
Incremental Notes were fair to the Company from a financial point of view.
On the Closing Date, the Incremental Notes were issued with an original
issuance discount of 5% and NextWave LLC was provided with net proceeds of
approximately $14,250,000, to be used solely in connection with the ordinary
course operations of the business of NextWave and its subsidiaries and not for
any acquisition of assets or businesses or other uses.
The Incremental Notes are subject to the following terms that are
material to the Company:
o As with all other Second Lien Notes, Interest on the Incremental
Notes will be payable quarterly at a rate of 14% per annum
through the issuance of additional Second Lien Notes, and after
the repayment of NextWave LLC's 7% Senior Secured Notes due 2010
(the "First Lien Notes"), in cash.
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o As with all other Second Lien Notes, the Incremental Notes will
mature on December 31, 2010.
o As with all other Second Lien Notes, the Incremental Notes will
be subordinated in right of payment to the First Lien Notes and
will otherwise constitute senior obligations of NextWave LLC.
o Following repayment of the First Lien Notes, the net proceeds
realized from all asset sales will be applied to mandatory
redemption of the Second Lien Notes at a redemption price equal
to the principal amount of the Second Lien Notes, accrued and
unpaid interest to the date of redemption, and a make-whole
payment based on the present value of the interest payable on the
Notes through maturity discounted to the redemption date at the
then applicable U.S. Treasury rate plus .50%. In the event of a
change of control of the Company, after giving effect to
repayment of the First Lien Notes, NextWave LLC is required to
offer to repurchase the Second Lien Notes at a price equal to the
principal amount of the Second Lien Notes, accrued and unpaid
interest to the date of repurchase, and a make-whole payment
based on the present value of the interest payable on the Second
Lien Notes through maturity discounted to the repurchase date at
the then applicable U.S. Treasury rate plus .50%.
o NextWave LLC must, at least three weeks prior to the beginning of
each fiscal quarter, deliver to the holders of the Second Lien
Notes a budget forecast for the six-consecutive-month period
commencing on the first day of such fiscal quarter, each such
budget forecast to be consistent with all previously delivered
budgets and in a form reasonably satisfactory to Avenue Capital
(each a "Six-Month Budget"), and with respect to each such
six-month period, shall provide the holders of the Second Lien
Notes a monthly report, as of the end of each month and within
two business days of each month-end, indicating its actual cash
balance as compared to the applicable month-end amount for such
Six-Month Budget and verifying that (i) its actual cash balance
has not deviated in a negative amount from the related Closing
Date Budget or Six-Month Budget, as applicable, by more than 10%
for such date (the "Budget Condition") and (ii) it has maintained
at all times a minimum cash balance of at least $5 million (the
"Minimum Balance Condition").
o As previously disclosed, the Second Lien Purchase Agreement
provides that failure to satisfy the Minimum Balance Condition
and/or the Budget Condition shall be an event of default, subject
to certain grace periods applicable to the Budget Condition, and
o All other terms of the existing Second Lien Notes and the Second
Lien Purchase Agreement are applicable to the Incremental Notes.
The Second Lien Notes are guaranteed by the Guarantors pursuant to the
Guaranty (the "Guaranty"), dated as of October 9, 2008, among the Guarantors and
the Collateral Agent. In addition, the Second Lien Notes are guaranteed by the
Company pursuant to the Parent Guaranty (the "Parent Guaranty"), dated as of
October 9, 2008, between the Company and the Collateral Agent. Pursuant to both
the Guaranty and the Parent Guaranty, the Second Lien Notes are guaranteed on a
senior-subordinated basis, with the guarantees to be subordinated only to the
First Lien Notes and otherwise constitute senior obligations of the guarantors.
Pursuant to the Pledge and Security Agreement (the "Security
Agreement"), dated as of October 9, 2008, among the Company, NextWave LLC, and
NextWave Broadband Inc., NW Spectrum Co., AWS Wireless Inc. and WCS Wireless
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License Subsidiary, LLC, as grantors (in such capacity, collectively, the
"Grantors"), and the Collateral Agent, executed for the benefit of each holder
of the Second Lien Notes, the obligations under the Second Lien Notes are
secured by second priority liens on, and security interests in, the collateral
securing the First Lien Notes, which consists of FCC licenses and spectrum
leases held by certain Company subsidiaries, the capital stock of certain
material Company subsidiaries, certain securities accounts, and proceeds of the
foregoing.
Warrant Agreement and Warrants
On the Closing Date, the Company entered into a Warrant Agreement (the
"Warrant Agreement"), among the Company and the Incremental Purchaser, whereby
the Company issued to the Incremental Purchaser warrants to purchase an
aggregate of 7.5 million shares of Common Stock (the "Warrants"). The Warrants
have an exercise price of $0.01 per share of Common Stock (subject to certain
adjustments as set forth in the Warrant Agreement) and are exercisable at any
time from the date of issuance until 5:00 P.M. eastern time, on June 29, 2012.
If at any time the Company makes a distribution in shares of Common Stock or
subdivides, splits or reclassifies its outstanding shares of Common Stock into a
larger number of shares of Common Stock, the number of shares issuable upon
exercise of each Warrant shall be adjusted so as to equal the number of shares
that the holder of such Warrant would have held immediately after the occurrence
of such event if the holder had exercised such Warrant for shares of Common
Stock immediately prior to the occurrence of such event. The shares of Common
Stock underlying the Warrants are also entitled to certain registration rights
as described in the section entitled "Registration Rights Acknowledgement"
below.
The Warrant Agreement entitles the Incremental Purchaser and its
affiliates to a pre-emptive right to acquire, up to the amount of its pro rata
ownership interest in the Company's Common Stock on a fully-diluted basis
(together with any ownership interests held by its affiliates), shares of common
stock, preferred stock or any other equity or equity linked security which the
Company may propose to issue. The pre-emptive right will expire on the earlier
of the exercise expiration date of the Warrants and the occurrence of a
qualified public offering, and does not apply to certain issuances of
securities, including issuances pursuant to pre-existing rights and grants made
pursuant to stock incentive plans of the Company.
Registration Rights Acknowledgement
The Company entered into a Registration Rights Agreement
Acknowledgement, dated as of the Closing Date, pursuant to which the Company
acknowledged that the Registration Rights Agreement, disclosed in the Company's
Current Report on Form 8-K filed with the SEC on October 7, 2008, which is
applicable to the existing Second Lien Notes, is also applicable to the
Incremental Notes.
Item 3.02 Unregistered Sales of Equity Securities.
Warrants
Pursuant to the Warrant Agreement, on the Closing Date, the Company
issued Common Stock Purchase Warrants (the "Warrants") exercisable for 7.5
million shares of Common Stock for an exercise price of $0.01 per share. The
information included under Item 1.01 above with respect to the Warrant Agreement
and the Warrants is incorporated by reference in this Item 3.02.
The offer and sale of the Warrants was exempt from registration under
the Securities Act of 1933, as amended, pursuant to an exemption from
registration under Section 4(2) thereof. The recipient of the Warrants
represented its intention to acquire the securities for investment purposes and
not with a view to or for sale in connection with any distribution thereof and
appropriate legends were affixed to certificates issued in connection with such
transaction.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
NextWave Wireless Inc. has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: July 6, 2009
NEXTWAVE WIRELESS INC.
By: /s/ Frank A. Cassou
-----------------------------------------------
Frank A. Cassou
Executive Vice President-Corporate Development,
Chief Legal Counsel and Secretary
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