Leap Wireless expects to emerge from Chapter 11 next week

By Jeff Pines

Washington, Aug. 12 - Leap Wireless International Inc. said it plans to emerge from bankruptcy next week.

As part of its settlement with the Federal Communications Commission, Leap will pay $36.7 million for unpaid principal, $8.3 million in interest and $278,000 in unjust enrichment penalties on the effective date of the company's reorganization plan.

The order and settlement also require the San Diego-based wireless communications company to repay the FCC $40 million in principal plus interest in installments scheduled for April and July 2005.

Another part of the settlement calls for Leap to use its best efforts to complete a debt offering by Jan. 31, 2005 so it can repay $350 million senior secured pay-in-kind notes it will issue when it emerges from bankruptcy. Part of the net proceeds will be used to repay the FCC.

Leap's reorganization plan calls for all of its common stock, warrants and options to be cancelled. It will then issue 60 million new shares to two creditor classes. Senior secured vendor debt claims will get a share of 96.5% of the new stock and a share of $350 million of new senior secured pay-in-kind notes. The Leap creditor trust will get the remaining 3.5% of the new common stock.

Leap filed for bankruptcy on April 13, 2003. The case was filed with the U.S. Bankruptcy Court for the Southern District of California.

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