EXHIBIT 99.1
LEAP ANNOUNCES ADVISORY CONTRACT WITH UBS WARBURG
~LEAP TO BEGIN RESTRUCTURING DISCUSSIONS WITH MAJOR CREDITOR GROUPS~
SAN DIEGO -- August 29, 2002 -- Leap Wireless International, Inc. (Nasdaq:
LWIN), an innovator of wireless communications services, today announced that it
has retained UBS Warburg to explore new sources of financing and restructuring
for the outstanding indebtedness of Leap and its subsidiaries. UBS Warburg and
the Company will begin discussions with major creditor groups in the near future
to address the financial challenges facing the Company and its subsidiaries.
Leap believes that its business operations should continue in an uninterrupted
fashion. The Company will continue to focus on operating its business, serving
its customers and adding new customers. At the same time, Leap will be working
with UBS Warburg to develop and implement a plan to provide a suitable long-term
capital structure for the Company and its subsidiaries.
"In working with UBS Warburg, we will focus on continuing to serve our
customers, preserving a team of experienced employees, adding new customers and
leading the industry in wireline replacement," said Harvey P. White, Leap's
chairman and chief executive officer. "In light of the Company's high level of
debt and the restricted availability of the capital markets, we believe that
hiring UBS Warburg and pursuing the alternatives available to us are in the best
interest of the Company and all of its stakeholders."
"Leap has dedicated a team to work with UBS Warburg to complete this task as
quickly as possible," said Susan G. Swenson, Leap's president and chief
operating officer. "Our employees will remain focused on our day-to-day business
and on continuing to provide high-quality service to each of our customers."
Leap also announced that it intends to pay a purchase price adjustment to MCG
PCS, Inc., as ordered by an arbitrator, by issuing approximately 21 million Leap
shares, based on a per share price of $1.894. In that regard, Leap has amended
its shareholder rights plan to permit the issuance of such shares to MCG PCS
without triggering the rights under its rights plan. Leap believes that it will
continue to comply with FCC regulations following this share issuance. Leap
further stated that the payment to MCG PCS in shares and other events will
probably cause the company to fail to comply with, and to require waivers of or
amendments to, its vendor credit agreements in the near term. If this failure to
comply with the vendor credit agreements
occurs and no amendment to or waiver of the credit agreements is obtained, the
lenders could cease funding new loans and declare the loans to be due and
payable. Also, if Leap issues the shares without first obtaining shareholder
consent, which it likely will not have time to obtain, it may face delisting
from the NASDAQ national market system.
ABOUT LEAP
Leap, headquartered in San Diego, Calif., is a customer-focused company
providing innovative communications services for the mass market. Leap pioneered
a wireless service that lets customers make all their local calls from within
their local calling area and receive calls from anywhere for one low, flat rate.
Leap has begun offering new services designed to further transform wireless
communications for consumers. For more information, please visit
www.leapwireless.com.
Except for the historical information contained herein, this news release
contains "forward-looking statements" reflecting management's current forecast
of certain aspects of Leap's future. Some forward-looking statements can be
identified by forward-looking words such as "believe," "think," "may," "could,"
"will," "estimate," "continue," "anticipate," "intend," "seek," "plan,"
"expect," "should," "would" and similar expressions. This news release is based
on current information, which we have assessed but which by its nature is
dynamic and subject to rapid and even abrupt changes. Our actual results could
differ materially from those stated or implied by such forward-looking
statements due to risks and uncertainties associated with our business. Factors
that could cause actual results to differ include, but are not limited to:
- - the unsettled nature of the wireless market, decreased consumer confidence
in the economy, new service offerings of increasingly large bundles of
minutes of use at increasingly low prices by some major carriers, and the
other issues facing the telecommunications industry in general, which have
created a level of uncertainty that adversely affects our ability to
predict future customer growth, as well as other key operating metrics;
- - the recent decision by the arbitrator in our dispute with the seller of
our Buffalo and Syracuse licenses which could significantly reduce the
Company's liquidity and/or result in substantial dilution to existing
stockholders;
- - changes in economic conditions, which could adversely affect the market
for wireless services;
- - a failure to meet the operational, financial or other covenants contained
in our credit facilities;
- - a deterioration of our relationships with our equipment vendors and
related lenders, including our failure to obtain amendments to our credit
facilities that we will request from time to time;
- - the acceptance of our product offering by our target customers;
- - the effects of actions beyond our control in our distribution network;
- - our ability to retain customers;
- - rulings by courts or the Federal Communications Commission (FCC) adversely
affecting our rights to own and/or operate certain wireless licenses or
impacting our rights and obligations to acquire the licenses on which we
were the winning bidder in the FCC's broadband PCS auction completed in
January 2001 (Auction 35), or changes in our ownership that could
adversely affect our status as an "entrepreneur" under FCC rules and
regulations;
- - our ability to access capital markets;
- - changes in our credit ratings;
- - our ability to maintain our cost, market penetration and pricing structure
in the face of competition and fraud;
- - failure of network systems to perform according to expectations;
- - the effect of competition;
- - technological challenges in developing wireless information services and
customer acceptance of such services if developed;
- - the impacts on the global and domestic economies and the financial markets
of recent terrorist activities;
- - the ensuing declaration of war on terrorism and the continued threat of
terrorist activity and other acts of war or hostility; and
- - other factors detailed in the section entitled "Risk Factors" included in
our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
2002 and in our other SEC filings.
The forward-looking statements should be considered in the context of these risk
factors. Investors and prospective investors are cautioned not to place undue
reliance on such forward-looking statements. We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
In addition, EBITDA and EBITDAM are financial measures used in the financial
community and ARPU, CCU, CPGA, penetration and churn are metrics used in the
wireless telecommunications industry. None of these terms are measures of
financial performance under generally accepted accounting principles in the
United States.
Leap and the Leap logo design are trademarks of Leap Wireless International,
Inc. Cricket and Comfortable Wireless are registered trademarks of Cricket
Communications, Inc.
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