NextWave restates first-, second-, third-lien notes for AT&T buyout

By Marisa Wong

Madison, Wis., Aug. 23 - NextWave Wireless Inc. and its wholly owned subsidiaries, NextWave Wireless LLC and NextWave Holdco LLC, entered into various agreements on Aug. 16 to amend and restate their notes in connection with AT&T Inc.'s acquisition of NextWave.

According to an 8-K filed Thursday with the Securities and Exchange Commission,

• NextWave Wireless LLC amended and restated its senior secured notes due 2012 (first-lien notes) in the aggregate principal amount of $148.93 million with accrued interest through Aug. 15 of $1.86 million. The restated notes carry a coupon of 15%.

The amended first-lien notes provide for the issuance of up to $15 million of additional notes to help pay expenses related to the acquisition. These incremental notes will accrue interest at 10% per year;

• NextWave Wireless LLC amended and restated its senior subordinated secured second-lien notes due 2013 in the aggregate principal amount of $207.98 million with accrued interest through Aug. 15 of $3.9 million. The restated second-lien notes have a coupon of 15%; and

• NextWave amended and restated its third-lien subordinated secured notes due 2013 by splitting the notes into two series: third-lien subordinated secured notes due 2013 issued by the parent company in the aggregate principal amount of $318.63 million with accrued interest through Aug. 15 of $6.37 million and third-lien subordinated secured notes due 2013 issued by NextWave Holdco in an aggregate principal amount of $428.32 million with accrued interest through Aug. 15 of $8.57 million. The two series each carry a coupon of 16%.

The third-lien notes were split into two series so that, following the merger, some of NextWave's notes would be direct obligations of the company and the remaining notes would become direct obligations of NextWave Holdco, which was formed for the purpose of transferring assets under the AT&T merger.

The covenants under the NextWave Holdco notes are substantially the same as those under the original third-lien notes, but additional restrictive covenants have been added.

Some restrictive covenants were also added to the restated first- and second-lien notes.

In addition to the split, the third-lien notes were amended to be no longer convertible into shares of NextWave stock.

According to the filing, NextWave Wireless LLC and NextWave Holdco also entered into a call option agreement on Aug. 16 with Wilmington Trust, NA and holders of the NextWave Holdco notes. Immediately prior to the closing of the transaction with AT&T, all of the NextWave Holdco notes will be automatically redeemed.

AT&T previously announced that it would acquire all the equity of NextWave for about $25 million plus a contingent payment of up to about $25 million. The outstanding debt held by NextWave's noteholders would be satisfied through cash and a transfer of selected NextWave assets.

NextWave is based in San Diego and develops wireless broadband products and technologies for mobile device and network manufacturers. AT&T is a Dallas-based telecommunications company.

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