Leap Wireless distributes $67.8 million to trust for unsecured creditors

By Carlise Newman

Chicago, Nov. 6 - Leap Wireless Inc. said it distributed $67.8 million of cash to a creditor trust, consisting of all of Leap's unrestricted cash, less a reserve for administrative claims, priority claims and other expenses in the amount of $16 million.

As of Nov. 3, and regardless of whether or not the plan becomes effective, the holders of Leap's 12½% senior notes and 14½% senior discount notes, received beneficial interests in the trust. The initial trustee for the beneficiaries of the Leap creditor trust will be U.S. Bank NA.

Noteholders received promptly after the initial distribution date a pro rata portion of $200,000 in cash previously pledged to secure payments of interest to the noteholders. On May 7, $14.1 million of restricted cash that secured Leap's obligations under its senior notes was distributed to the noteholders, as permitted by an order of the bankruptcy court.

Under the fifth amended reorganization plan, the reorganized company will issue and contribute 96.5% of the issued and outstanding shares of new Leap common stock to subsidiary Cricket Communications Holdings Inc. The stock will then be immediately distributed to holders of Cricket's senior secured vendor debt claims. These holders will also receive $350 million in new senior secured notes.

General unsecured creditors, including the holders of Leap's 12½% senior notes and 14½% senior discount notes, will receive the remaining 3.5% of the stock and other assets.

All the outstanding shares of Leap common stock, warrants and options will be cancelled. The holders of Leap common stock, warrants and options will not receive any distributions under the plan.

The reorganization plan was confirmed by the United States Bankruptcy Court for the Southern District of California on Oct. 22.

It will become effective when various conditions are satisfied including the receipt of all required regulatory approvals from the Federal Communications Commission for the change of control of wireless licenses that will occur upon the company's emergence from bankruptcy.

The plan will cut Leap's long-term debt to $426 million from more than $2.4 billion.

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