Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
September 28, 2007
Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549
Attn: Mr. Paul Fischer
RE: NEXTWAVE WIRELESS INC.
REGISTRATION STATEMENT ON FORM S-3
FILE NO. 333-144974
FILED JULY 30, 2007
Ladies and Gentlemen:
On behalf of our client, NextWave Wireless Inc. (the "Company"), we are
transmitting herewith via the EDGAR system for filing with the Commission our
response to the Staff's letter dated August 28, 2007, regarding the Registration
Statement on Form S-3 (the "Registration Statement") of the Company (File No.
333-144974, together with exhibits thereto).
Set forth below in bold are each of the comments in the Staff's letter.
Immediately following each of the Staff's comments is the Company's response to
that comment, including where applicable, a cross-reference to the location of
changes made in response to the Staff's comment. For your convenience, each of
the numbered paragraphs below corresponds to the numbered comment in the Staff's
comment letter and includes the caption used in the comment letter.
GENERAL
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1. WE NOTE THAT YOU ARE REGISTERING THE SALE OF APPROXIMATELY OVER 31 MILLION
SHARES OF COMMON STOCK. GIVEN THE SIZE RELATIVE TO THE NUMBER OF SHARES
OUTSTANDING HELD BY NON-AFFILIATES, THE NATURE OF THE OFFERING AND SOME OF
THE SELLING SECURITY HOLDERS, THE TRANSACTION APPEARS TO BE A PRIMARY
OFFERING. BECAUSE YOU ARE NOT ELIGIBLE TO CONDUCT A PRIMARY OFFERING ON
FORM S-3, YOU ARE NOT ELIGIBLE TO CONDUCT A PRIMARY AT-THE-MARKET OFFERING
UNDER RULE 415(A)(4). THEREFORE, YOU SHOULD WITHDRAW THE CURRENT
REGISTRATION STATEMENT, FILE A NEW REGISTRATION STATEMENT ON A PERMISSIBLE
FORM; SET A FIXED PRICE AT WHICH THE SECURITY HOLDER WILL SELL THE
SECURITIES; AND IDENTIFY THE SELLING SECURITY HOLDERS AS UNDERWRITERS IN
Paul Fischer
Securities and Exchange Commission
September 27, 2007
Page 2
THE FILING. IF YOU DISAGREE WITH OUR ANALYSIS, PLEASE ADVISE US OF YOUR
BASIS FOR DETERMINING THAT THE TRANSACTION IS APPROPRIATELY CHARACTERIZED
AS A TRANSACTION THAT IS ELIGIBLE TO BE MADE UNDER RULE 415(A)(1)(I). IN
YOUR ANALYSIS, PLEASE ADDRESS THE FOLLOWING AMONG ANY OTHER RELEVANT
FACTORS:
o THE NUMBER OF SELLING SHAREHOLDERS AND THE PERCENTAGE OF THE OVERALL
OFFERING MADE BY EACH SHAREHOLDER;
o THE DATE ON WHICH AND THE MANNER IN WHICH EACH SELLING SHAREHOLDER
RECEIVED THE SHARES AND/OR THE OVERLYING SECURITIES;
o THE RELATIONSHIP OF EACH SELLING SHAREHOLDER WITH YOU, INCLUDING AN
ANALYSIS OF WHETHER THE SELLING SHAREHOLDER IS YOUR AFFILIATE;
o ANY RELATIONSHIPS AMONG THE SELLING SHAREHOLDERS;
o THE DOLLAR VALUE OF THE SHARES REGISTERED IN RELATION TO THE
PROCEEDS THAT YOU RECEIVED FROM THE SELLING SHAREHOLDERS FOR THE
SECURITIES, EXCLUDING AMOUNTS OF PROCEEDS THAT WERE RETURNED (OR
WILL BE RETURNED) TO THE SELLING SHAREHOLDERS AND/OR THEIR
AFFILIATES IN FEES OR OTHER PAYMENTS;
o THE DISCOUNT AT WHICH THE SHAREHOLDERS WILL PURCHASE THE COMMON
STOCK UNDERLYING THE SENIOR PREFERRED STOCK UPON CONVERSION OR
EXERCISE; AND
o WHETHER OR NOT ANY OF THE SELLING SHAREHOLDERS IS IN THE BUSINESS OF
BUYING AND SELLING SECURITIES.
The Company respectfully submits that the resale of up to 253,000 shares
(the "Preferred Shares") of its Series A Senior Convertible Preferred
Stock (the "Series A Preferred Stock") and up to 30,984,784 shares of its
Common Stock, par value $0.001 per share (the "Common Stock"), to be
issued upon the conversion of the Preferred Shares (the "Underlying
Shares") by the selling stockholders included in the Registration
Statement (the "Selling Stockholders") is a secondary offering and not a
primary offering on behalf of the Company.
The Company acknowledges that after giving effect to the conversion of the
Series A Preferred Stock, the Underlying Shares would represent 37.5% of
the Company's outstanding common shares held by non-affiliates.(1) Before
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(1) As of August 25, 2007, the Company had 92,663,491 shares of Common Stock
outstanding. Of such shares, 51,706,987, or 55.80%, are held by non-affiliates
of the Company. Such calculation excludes the Common Stock held be executive
officers, directors and holders of more than 10% of the Common Stock outstanding
as of August 25, 2007. This calculation does not reflect a determination that
such persons are affiliates for any other purpose. The 355,000 shares of
outstanding Series A Preferred Stock are currently convertible into 32,755,845
shares of Common Stock. After giving effect to such conversion, the Company
would have 125,419,336 shares of Common Stock outstanding on an as-converted
basis. Of such shares, 84,462,832, or 67.34%, would be held by non-affiliates of
the Company.
Paul Fischer
Securities and Exchange Commission
September 27, 2007
Page 3
giving effect to the conversion of the Series A Preferred Stock, the
Underlying Shares to be registered for resale represent 60.0% such shares
(while presented for completeness, the Company does not believe such
percentage accurately reflects the ownership represented by the Underlying
Shares, as by definition, the Underlying Shares will not be outstanding
unless the Series A Preferred is converted). It has been reported that the
Staff has expressed concerns, primarily in the case of offerings involving
securities with variable conversion ratios or exercise prices, that
registered resale offerings involving more than 33% of the issuer's
outstanding shares held by non-affiliates may constitute indirect primary
offerings.(2) In determining whether a secondary offering is in fact an
indirect primary offering in which the selling shareholders are acting as
a conduit for the issuer, we understand that the Staff considers the
totality of the circumstances, including those outlined in the Staff's
letter and in No. 29 of the Manual of Publicly Available Telephone
Interpretations (July 1997).
As we will outline in greater detail below, because none of the Selling
Stockholders is acting on behalf of the Company and because the
Registration Statement covers only securities being offered or sold by
persons other than the Company or any of its affiliates, the Company
believes that the resale of the Preferred Shares and the Underlying Shares
pursuant to the Registration Statement (the "Resale") is appropriately
characterized as a transaction that is eligible to be made on a shelf
basis pursuant to Rule 415(a)(1)(i).
While Rule 415(a)(1)(x) is not applicable to the current offering, given
the Staff's comment the Company wishes to clarify that it is eligible to
conduct a primary offering on Form S-3. The aggregate market value of
Company's common equity held by non-affiliates is approximately $301
million based on the closing price per share of the Common Stock on Nasdaq
on September 25, 2007. The Company has been a reporting company under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") since
June 30, 2006, when the Company's predecessor, NextWave Wireless LLC,
became a reporting company pursuant to Section 12(g) of the Exchange Act.
On November 14, 2006, the Company filed a Current Report on Form 8-K
announcing that it became a successor in interest to NextWave Wireless LLC
in connection with a holding company merger completed on November 13,
2007. The Company has filed in a timely manner all reports required to be
filed under the Exchange Act during the past twelve calendar months
pursuant to Instruction I.A. of Form S-3.
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(2) See "Unblocking Clogged PIPEs: SEC Focuses on the Availability of Rule 415",
Insights, Volume 21, Number 5, May 2007 by Stanley Keller and William Hicks.
Paul Fischer
Securities and Exchange Commission
September 27, 2007
Page 4
The Company presents below its analysis of the factors requested in the
Staff's comment and in No. 29 of the Manual of Publicly Available
Telephone Interpretations (July 1997). The Company believes that when
these factors are viewed as a whole, they support its position that the
Resale is a secondary offering.
A. The Number Of Selling Shareholders And The Percentage Of The Overall
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Offering Made By Each Shareholder
---------------------------------
The Company issued and sold 355,000 shares of its Series A Preferred Stock
in a private placement completed on March 28, 2007 (the "Private
Placement"). In the Private Placement, shares of Series A Preferred Stock
were purchased by 21 holders (several holders purchased through more than
one of their investment vehicles, yielding a total of 10 separate
purchasers when affiliated funds are combined). Certain purchasers did not
possess or have waived registration rights and are not included as Selling
Stockholders. The percentage of the Resale to be offered by each Selling
Stockholder is set forth in the table below.
PERCENTAGE
SELLING SHAREHOLDER NAME(3) OF RESALE
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Avenue Capital Group 39.5%
D.E. Shaw Group 11.9%
Highbridge Capital 10.1%
Investcorp Interlachen Multi-Strategy Master Fund 3.0%
Limited
Kings Road Investments Ltd. 9.9%
Stanfield Offshore Leveraged Assets, Ltd. 9.9%
York Capital 15.7%
In the context of this response, we respectfully note that whether a
Selling Stockholder should be deemed an underwriter in making resales is a
facts and circumstances test and not a percentage test. See SEC Release
No. 33-6383; SEC Telephone Interpretations, Rule 415, Number 5 (July
1997).
B. The Date On Which And The Manner In Which Each Selling Shareholder
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Received The Shares And/Or The Overlying Securities
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As described in the Company's Annual Report on Form 10-K for the year
ended December 31, 2006, the Selling Stockholders purchased the Preferred
Shares from the Company in a private placement pursuant to a Securities
Purchase Agreement on March 28, 2007. The private placement was exempt
from the registration requirements of the Securities Act pursuant to
Section 4(2) thereof and constituted the primary offering by the Company.
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(3) Affiliated funds have been combined.
Paul Fischer
Securities and Exchange Commission
September 27, 2007
Page 5
The negotiation of the terms of the Preferred Shares was on an arms length
basis.
C. The Relationship Of Each Selling Shareholder With You, Including An
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Analysis Of Whether The Selling Shareholder Is Your Affiliate
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Each of the Selling Stockholders' relationship with the Company was, and
is now, one of an investor. The total beneficial ownership of the
Company's Common Stock (including the Underlying Shares) of each selling
shareholder is set forth in the table below (calculated in accordance with
Rule 13d-3 of the Exchange Act).
SELLING SHAREHOLDER NAME PERCENTAGE OF
COMMON STOCK
------------------------ -------------
Avenue Capital Group 13.1%
D.E. Shaw Group 3.8%
Highbridge Capital 3.3%
Investcorp Interlachen Multi-Strategy Master Fund 1.1%
Limited
Kings Road Investments Ltd. 3.4%
Stanfield Offshore Leveraged Assets, Ltd. 3.2%
York Capital 5.0%
Each of the Selling Stockholders other than the funds managed by Avenue
Capital Management II, L.P. (the "Avenue Capital Group") beneficially owns
5% or less of the Common Stock and has no indicia of control such as
executive officer status, board representation rights or voting or other
contractual rights not shared by other securityholders. While Avenue
Capital Group beneficially owns approximately 13.1% of the shares of
Common Stock, and Robert Symington, an employee of Avenue Capital
Management II, L.P. sits on NextWave's Board of Directors, the Avenue
Capital Group similarly does not have control rights such as board
representation rights or other voting or contractual rights not shared by
other stockholders. Mr. Symington was an independent director of NextWave
prior to any investment in the Company by Avenue Capital Group. Avenue
Capital Group has disclosed in its Schedule 13G filed with the Securities
and Exchange Commission that Mark Lasry, Avenue Capital Management II
GenPar, LLC and Avenue Capital Management II, L.P. have sole voting power
and dispositive power over the shares of Common Stock beneficially owned
by the various members of the Avenue Capital Group. Mr. Symington is not
an executive officer, director or equityholder of any member of the Avenue
Capital Group. In determining that none of the Selling Stockholders,
including Avenue Capital, is an affiliate, the Company has also considered
the fact that as of August 25, 2007 Allen Salmasi and his controlled
entity Navation, Inc. beneficially own approximately 25.4% of the Common
Stock, Douglas F. Manchester and his controlled entity Manchester
Financial Group, L.P. beneficially own approximately 11.2% of the Common
Stock, and all executive officers and directors of the Company
Paul Fischer
Securities and Exchange Commission
September 27, 2007
Page 6
as a group beneficially own approximately 36.0% of the Common Stock, each
calculated in accordance with Rule 13d-3.
D. Any Relationships Among The Selling Shareholders
------------------------------------------------
The Company is not aware of any relationship among the Selling
Shareholders. Each Selling Stockholder has represented in the Securities
Purchase Agreement that neither itself nor any of its affiliates or
representatives is acting as a financial advisor or fiduciary to any other
Selling Stockholder, nor will have any duty or responsibility to any other
Selling Stockholder on a continuing basis.
E. The Dollar Value Of The Shares Registered In Relation To The Proceeds
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That You Received From The Selling Shareholders For The Securities,
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Excluding Amounts Of Proceeds That Were Returned (Or Will Be Returned) To
-------------------------------------------------------------------------
The Selling Shareholders And/Or Their Affiliates In Fees Or Other Payments
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The Company received gross cash proceeds of $355 million from the Private
Placement of the Preferred Shares, with $253 million of such proceeds
being attributable to sales of Preferred Shares to the Selling
Stockholders. Net proceeds to the Company in the Private Placement were
$351 million. The $4 million difference between the gross proceeds of the
Preferred Shares and the net proceeds represent fees paid to UBS
Securities LLC as placement agent for the Offering and to legal counsel.
No proceeds have been or will be returned to the Selling Stockholders or
their affiliates in fees or other payments. As of the most recent dividend
accrual date, the dollar value of the Preferred Shares being registered,
based on their liquidation preference (there is no public market for the
Preferred Shares) was $257,954,583.33 million, which is equal to the gross
proceeds of the Private Placement attributable to the Selling Stockholders
plus approximately $4.95 million in dividends accrued since the issuance
of the Preferred Stock. The current dollar value of the Underlying Shares
being registered is $180,331,442 million, which is equal to $342.4
million, which is the liquidation preference of the Preferred Shares
assuming accretion of dividends until March 28, 2011, divided by the
Conversion Price of $11.05, yielding 30,984,784 Underlying Shares, having
a value per share of $5.82, based on the closing price per share of the
Common Stock on Nasdaq on September 25, 2007.
F. The Discount At Which The Shareholders Will Purchase The Common Stock
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Underlying The Senior Preferred Stock Upon Conversion Or Exercise
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There will be no discount applicable to the purchase of Underlying Shares
upon conversion of the Preferred Shares. The Preferred Shares are
convertible by holders into a number of Underlying Shares equal to the
liquidation preference then in effect divided by a fixed conversion price
of $11.05. The liquidation preference is expected to increase over time as
quarterly dividends on the Preferred Shares may be added to the
liquidation preference in lieu of cash dividends until March 28, 2011.
Paul Fischer
Securities and Exchange Commission
September 27, 2007
Page 7
At the time of issuance, the conversion price of $11.05 was a 10.5%
premium to the closing price per share of the Common Stock on Nasdaq
($10.00). Currently, the conversion price represents an 89.9% premium to
the closing price per share of the Common Stock on Nasdaq on September 25,
2007 ($5.82).
The Preferred Shares do not have "antidilution" or similar adjustments
which are triggered by the issuance of additional shares at less than a
particular value. The conversion price similarly does not adjust based on
the trading price of the Common Stock. The conversion price would only be
adjusted in the event of fundamental corporate events such as a stock
dividend or distribution or a combination or subdivision of shares of the
Company. These types of adjustments would not result in the creation of a
"discount" upon conversion, but simply ensure that the holders of the
Preferred Shares maintain a consistent interest in the common ownership
structure of the Company in such an event.
G. Whether Or Not Any Of The Selling Shareholders Is In The Business Of
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Buying And Selling Securities
-----------------------------
While the Selling Stockholders are investment funds in the business of
buying and selling securities, each of the Selling Stockholders has made
an investment in the Company for its own account and holds the risk of
ownership. The Company respectfully submits that the Selling Stockholders
are not acting as a conduit for a primary distribution of securities by
the Company. The Selling Stockholders purchased the Preferred Shares on
March 28, 2007, approximately six months ago, and, except for one trade
between two of the Selling Stockholders, have not sold any securities
since such time. Even after the registration statement is declared
effective, the Selling Stockholders will continue to bear the risk of
ownership as long as they hold the Preferred Shares or the Underlying
Securities.(4) In addition, the Company notes that many of the Selling
Stockholders have held long-term investment positions in the Company's
securities. Avenue Capital Group, Highbridge Capital, Investcorp
Interlachen Multi-Strategy Master Fund Limited and Kings Road Investments
Ltd., who collectively comprise approximately 62.5% of the Resale, have
been invested in the Company since July 2006.
None of the Selling Stockholders is in the business of underwriting
securities. Based on information provided to the Company, Investcorp
Investment Advisers Limited (IIAL), a manager of Investcorp Interlachen
Multi-Strategy Master Fund Limited, and an SEC registered investment
adviser, is under common control with N.A. Investcorp LLC (NAI), an NASD
member broker dealer who is not participating in the sale of the Preferred
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(4) The risk of market changes in the Company's stock price is borne wholly by
the Selling Stockholders. As noted above, the price for the Company's Common
Stock has declined by approximately 41.8% since the closing of the Private
Placement, resulting in an increase in the effective premium for the conversion
price to approximately 89.9%.
Paul Fischer
Securities and Exchange Commission
September 27, 2007
Page 8
Shares to or the Underlying Shares by the Selling Stockholders. A spouse
of an employee of Interlachen Capital Group LP, the investment manager of
Investcorp Interlachen Multi-Strategy Master Fund Limited, may be
associated with an NASD member. None of the other Selling Stockholders has
advised the Company that they are broker-dealers or affiliated with
broker-dealers.
As disclosed in the "Use of Proceeds" section of the Prospectus, the
Company will not receive any proceeds from the Resale of the Preferred
Shares or Underlying Securities and the only proceeds it received from the
sale of the Series A Preferred Stock were received in connection with the
closing of the Private Placement on March 28, 2007.
The Company respectively contends that the cumulative impact of the above
discussed items presents sufficient circumstances to warrant the Offering
to be treated as a resale secondary offering under Rule 415.
THE OFFERING, PAGE 3
--------------------
2. DISCLOSE IN A TABLE THE DOLLAR AMOUNT OF EACH PAYMENT (INCLUDING THE VALUE
OF ANY PAYMENTS TO BE MADE IN COMMON STOCK) IN CONNECTION WITH THE
CONVERTIBLE PREFERRED SECURITIES TRANSACTION THAT YOU HAVE MADE OR MAY BE
REQUIRED TO MAKE TO THE SELLING SHAREHOLDERS, ANY AFFILIATE OF THE SELLING
SHAREHOLDERS, OR ANY PERSON WITH WHOM ANY SELLING SHAREHOLDER HAS A
CONTRACTUAL RELATIONSHIP REGARDING THE TRANSACTION (INCLUDING ANY INTEREST
PAYMENTS, LIQUIDATED DAMAGES, PAYMENTS MADE TO "FINDERS" OR "PLACEMENT
AGENTS," AND ANY OTHER PAYMENTS OR POTENTIAL PAYMENTS). PLEASE PROVIDE
FOOTNOTE DISCLOSURE OF THE TERMS OF EACH SUCH PAYMENT. PLEASE DO NOT
INCLUDE ANY REPAYMENT OF PRINCIPAL ON THE CONVERTIBLE SECURITIES IN THIS
DISCLOSURE.
FURTHER, DISCLOSE THE NET PROCEEDS TO YOU FROM THE SALE OF THE CONVERTIBLE
PREFERRED AND THE TOTAL POSSIBLE PAYMENTS TO THE SELLING SHAREHOLDERS AND
ANY AFFILIATES IN THE FIRST YEAR FOLLOWING THE SALE OF THE CONVERTIBLE
PREFERRED SHARES.
The Registration Statement has been revised on pages 4 - 6 in
response to the Staff's comment. Pursuant to the terms of the
Preferred Shares, the Selling Stockholders are entitled to quarterly
dividend payments and redemption payments (if applicable) as
described on pages 4 to 5 of the Registration Statement. In
addition, as described on page 5 of the Registration Statement, the
dividend rate is subject to adjustment if the Company fails to
comply with certain of its obligations under the Securities Purchase
Agreement. Pursuant to the Registration Rights Agreement entered
into in connection with the Private Placement, the Company agreed to
pay all expenses in connection with the filing of the Registration
Paul Fischer
Securities and Exchange Commission
September 27, 2007
Page 9
Statement, which expenses are disclosed in the Registration
Statement.
The Company has included a statement on page 7 of the Registration
Statement clarifying that, except pursuant to the terms of the
Preferred Shares as described in the Prospectus, the Company has not
made and is not obligated to make any payment in connection with the
Private Placement or the Resale to the Selling Stockholders, any
affiliate of the Selling Stockholders or any person with whom any
Selling Stockholder has a contractual relationship. Accordingly, the
Company has not included a table of payments as requested by the
Staff's comment..
COMMON STOCK OFFERED BY THE SELLING STOCKHOLDERS, PAGE 3
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3. PLEASE REVISE TO BRIEFLY DESCRIBE HOW THE CONVERSION PRICE ADJUSTMENT
FEATURE WORKS.
The Registration Statement has been revised on pages 5 and 6 in
response to the Staff's comment. As noted above, the Preferred
Shares do not have "antidilution" or similar adjustments which are
triggered by the issuance of additional shares at less than a
particular value. The conversion price similarly does not adjust
based on the trading price of the Common Stock.
COMMON STOCK TO BE OUTSTANDING AFTER THIS OFFERING, PAGE 3
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4. DISCLOSE THAT THE SHARES BEING REGISTERED REPRESENT ___% OF YOUR SHARES
CURRENTLY OUTSTANDING AND ___% OF YOUR SHARES HELD BY NON-AFFILIATES.
The Registration Statement has been revised on page 5 in response to
the Staff's comment.
5. DISCLOSE THE TOTAL DOLLAR VALUE OF THE SECURITIES UNDERLYING THE
CONVERTIBLE PREFERRED STOCK THAT YOU HAVE REGISTERED FOR RESALE (USING THE
NUMBER OF UNDERLYING SECURITIES THAT YOU HAVE REGISTERED FOR RESALE AND A
RECENT MARKET PRICE PER SHARE FOR THOSE SECURITIES).
The Registration Statement has been revised on page 5 in response to
the Staff's comment.
SELLING STOCKHOLDERS, PAGE 32
-----------------------------
6. PLEASE TELL US IN YOUR RESPONSE LETTER WHETHER ANY OF THE SELLING
STOCKHOLDERS IS A BROKER-DEALER OR AN AFFILIATE OF A BROKER-DEALER. IF A
SELLING STOCKHOLDER IS A BROKER-DEALER OR AN AFFILIATE OF A BROKER-DEALER,
YOUR PROSPECTUS SHOULD ALSO STATE, IF TRUE:
o THAT SUCH SELLER PURCHASED IN THE ORDINARY COURSE OF BUSINESS; AND
Paul Fischer
Securities and Exchange Commission
September 27, 2007
Page 10
o AT THE TIME OF THE PURCHASE OF THE SECURITIES TO BE RESOLD, THE
SELLER HAD NO AGREEMENTS OR UNDERSTANDINGS, DIRECTLY OR INDIRECTLY,
WITH ANY PERSON TO DISTRIBUTE THE SECURITIES.
The Registration Statement has been revised on page 34 to reflect that
each Selling Stockholder represented to us at the time of its purchase in
the Private Placement that: (i) the Preferred Shares are being acquired
for investment by such Selling Stockholder in the ordinary course of
business and not with a view towards distribution and (ii) it does not
have any agreement or understanding with any other person to sell or
otherwise distribute the Preferred Shares.
Based on information provided to the Company, Investcorp Investment
Advisers Limited (IIAL), a manager of Investcorp Interlachen
Multi-Strategy Master Fund Limited, one of the Selling Stockholders, and
an SEC registered investment adviser, is under common control with N.A.
Investcorp LLC (NAI), an NASD member broker dealer who is not
participating in the sale of the Preferred Shares to or the Underlying
Shares by the Selling Stockholders. A spouse of an employee of Interlachen
Capital Group LP, the investment manager of Investcorp Interlachen
Multi-Strategy Master Fund Limited, may be associated with an NASD member.
None of the other Selling Stockholders have advised the Company that they
are broker-dealers or affiliated with broker-dealers.
7. PLEASE REVISE TO IDENTIFY THE NATURAL PERSON OR PERSONS HAVING VOTING
AND/OR DISPOSITIVE POWERS OVER THE SHARES HELD BY NON-NATURAL ENTITIES, TO
THE EXTENT THEY ARE NOT WIDELY-HELD.
The Registration Statement has been revised on pages 34-37 in
response to the Staff's comment.
8. PLEASE DISCLOSE THE TOTAL POSSIBLE PROFIT THE SELLING SHAREHOLDERS COULD
REALIZE AS A RESULT OF ANY CONVERSION DISCOUNT FOR THE SECURITIES
UNDERLYING THE CONVERTIBLE PREFERRED SHARES, PRESENTED IN A TABLE WITH THE
FOLLOWING INFORMATION DISCLOSED IN SEPARATE COLUMNS OR ROWS:
o THE CURRENT MARKET PRICE PER SHARE OF THE SECURITIES UNDERLYING THE
CONVERTIBLE PREFERRED;
o THE CURRENT CONVERSION PRICE PER SHARE OF THE UNDERLYING SECURITIES,
CALCULATED BY USING THE PRICE PER SHARE ESTABLISHED IN THE
CONVERTIBLE PREFERRED SECURITIES;
o THE TOTAL POSSIBLE SHARES UNDERLYING THE CONVERTIBLE PREFERRED
(ASSUMING COMPLETE CONVERSION OF THE CONVERTIBLE PREFERRED SHARES
AND ALL DIVIDEND PAYMENTS MADE IN SHARES) AND THE COMBINED
CONVERSION PRICE OF THE TOTAL NUMBER OF SHARES UNDERLYING THE
CONVERTIBLE PREFERRED CALCULATED BY USING THE CONVERSION PRICE AS OF
Paul Fischer
Securities and Exchange Commission
September 27, 2007
Page 11
THE DATE OF THIS PROSPECTUS AND THE TOTAL POSSIBLE NUMBER OF SHARES
THE SELLING SHAREHOLDERS MAY RECEIVE.
o THE COMBINED MARKET PRICE OF THE TOTAL NUMBER OF SHARES UNDERLYING
THE CONVERTIBLE SECURITIES, CALCULATED BY USING THE MARKET PRICE PER
SHARE AS OF THE DATE OF THIS PROSPECTUS AND THE TOTAL POSSIBLE
SHARES UNDERLYING THE CONVERTIBLE PREFERRED; AND
o THE TOTAL POSSIBLE DISCOUNT TO THE MARKET PRICE OF THE CONVERTIBLE
PREFERRED, CALCULATED BY SUBTRACTING THE TOTAL CONVERSION FROM THE
MARKET PRICE OF THE TOTAL NUMBER OF SHARES UNDERLYING THE
CONVERTIBLE PREFERRED AS OF THE DATE OF THIS PROSPECTUS.
SINCE THERE ARE PROVISIONS IN THE CONVERTIBLE PREFERRED THAT COULD RESULT
IN A CHANGE IN THE CONVERSION PRICE PER SHARE, PLEASE PROVIDE ADDITIONAL
TABULAR DISCLOSURE AS APPROPRIATE. FOR EXAMPLE, IF THE CONVERSION PRICE
PER SHARE IS FIXED UNLESS AND UNTIL THE MARKET PRICE FALLS BELOW A STATED
PRICE, AT WHICH POINT THE CONVERSION PRICE PER SHARE DROPS TO A LOWER
PRICE, PLEASE PROVIDE ADDITIONAL DISCLOSURE.
The requested disclosure seeks information concerning the total
possible profit that may be realized by the Selling Shareholders as
a result of conversion discounts. Because the Preferred Shares do
not include any conversion discount, the requested disclosure is
inapplicable and has not been provided. In addition, as described
above, there is no adjustment to the conversion price per share
except in highly limited circumstances such as a stock split or
combination. Also see note 4 above.
9. PLEASE PROVIDE US IN YOUR RESPONSE LETTER, WITH A VIEW TOWARD DISCLOSURE
IN THE PROSPECTUS, A TABLE SHOWING THE TOTAL POSSIBLE PROFIT TO BE
REALIZED AS A RESULT OF ANY CONVERSION OR EXERCISE PRICE DISCOUNTS FOR
SECURITIES UNDERLYING ANY OTHER WARRANTS, OPTIONS, NOTES, OR OTHER
NEXTWAVE WIRELESS SECURITIES THAT ARE HELD BY THE SELLING SHAREHOLDERS OR
ANY AFFILIATES OF THE SELLING SHAREHOLDERS, PRESENTED IN A TABLE WITH THE
FOLLOWING INFORMATION DISCLOSED IN SEPARATE COLUMNS OR ROWS:
o THE CURRENT PRICE PER SHARE OF THE UNDERLYING SECURITIES;
o THE CURRENT CONVERSION/EXERCISE PRICE PER SHARE OF THAT OTHER
SECURITY, CALCULATED AS FOLLOWS:
+ IF THE CONVERSION/EXERCISE PRICE PER SHARE IS SET AT A FIXED
PRICE, USE THE CURRENT PRICE PER SHARE; AND
+ IF THE CONVERSION/EXERCISE PRICE PER SHARE IS NOT SET AT A FIXED
PRICE AND, INSTEAD, IS SET AT A FLOATING RATE IN RELATIONSHIP TO
THE MARKET PRICE OF THE UNDERLYING SECURITY, USE THE
Paul Fischer
Securities and Exchange Commission
September 27, 2007
Page 12
CONVERSION/EXERCISE DISCOUNT RATE AND THE CURRENT MARKET PRICE
PER SHARE AND DETERMINE THE CONVERSION/EXERCISE PRICE PER SHARE
AS OF THAT DATE;
o THE TOTAL POSSIBLE SHARES TO BE RECEIVED UNDER THE PARTICULAR
SECURITIES (ASSUMING COMPLETE CONVERSION/EXERCISE);
o THE COMBINED MARKET PRICE OF THE TOTAL NUMBER OF UNDERLYING SHARES,
CALCULATED BY USING THE CURRENT MARKET PRICE PER SHARE AND THE TOTAL
POSSIBLE SHARES TO BE RECEIVED;
o THE TOTAL POSSIBLE SHARES TO BE RECEIVED AND THE COMBINED
CONVERSION/EXERCISE PRICE OF THE TOTAL NUMBER OF SHARES UNDERLYING
THAT OTHER SECURITY CALCULATED BY USING THE CURRENT
CONVERSION/EXERCISE PRICE AND THE TOTAL POSSIBLE NUMBER OF
UNDERLYING SHARES; AND
o THE TOTAL POSSIBLE DISCOUNT TO THE CURRENT MARKET PRICE, CALCULATED
BY SUBTRACTING THE TOTAL CONVERSION/EXERCISE PRICE FROM THE COMBINED
CURRENT MARKET PRICE OF THE TOTAL NUMBER OF UNDERLYING SHARES.
As disclosed in the Company's previous Exchange Act filings, in July 2006,
the Company issued its 7% Senior Secured Notes due 2010 (the "Notes") in
the aggregate principal amount of $350.0 million. The purchasers of the
Notes were investment funds and other institutional investors, including,
among others, affiliates of Avenue Capital Group, Investcorp Interlachen
Multi-Strategy Master Fund Limited, Highbridge Capital Management, LLC and
Kings Road Investments Ltd., all of whom are Selling Stockholders. None of
the purchasers of the Notes received any compensation in connection with
the financing.
As an integral part of the Notes financing described above, the Company
entered into a warrant agreement with the purchasers of the Notes whereby
following completion of the corporate conversion holding company merger on
November 13, 2006, it issued warrants to purchase 4,110,382 shares of
Common Stock. The shares issuable upon exercise of the warrants
represented 5% of the outstanding shares of the Company's Common Stock of
as of the date of the Company's corporate conversion merger and before
giving effect to the exercise of any warrant. The warrants have an
exercise price of $0.01 per share (subject to certain adjustments as set
forth in the warrant agreement) and are exercisable at any time from the
date of issuance until July 15, 2009, and have standard anti-dilution
protection provisions. The Shelf Registration Statement registering the
shares underlying the warrants was declared effective by the Staff on
December 29, 2006.
For the reasons described below, the Company believes that it may be
misleading to investors to present the information requested by the Staff
Paul Fischer
Securities and Exchange Commission
September 27, 2007
Page 13
relating to the warrants in the Registration Statement. In addition, the
Company does not believe such information is material to investors.
The issuance and sale of the Notes and related warrants is not related to
the Private Placement or the Resale. The two transactions are separated by
eight months and had no mutual conditions. The entire proceeds from the
Notes offering were designated for the acquisition of spectrum licenses
and were used for the acquisition of WCS Wireless, Inc. for $160.5
million, the acquisition of two new EBS leases for $22.1 million and for
the majority of the funding for the acquisition of 154 AWS licenses for
$115.6 million. The proceeds from the Private Placement were designated to
fund working capital needs and potential strategic transactions. The
Private Placement was not contemplated at the time of the Notes
transaction and the warrants were not offered as an inducement to
participate in any future financing rounds. While some of the Selling
Stockholders were also purchasers of the Notes, 36.6% of the Notes and
55.5% of the Series A Preferred Stock were purchased by investors that did
not invest in the other transaction.
The warrants were issued as an integral part of the Notes transaction, and
were intended to induce the Note purchasers to accept financing terms that
were more favorable to the Company than otherwise obtainable. Of the
$297.5 million paid by the Note purchasers, $24.3 million was allocated to
the purchase of the warrants. Accordingly, the Company believes it would
be misleading to view the penny exercise price of the warrants in
isolation and to deem the spread between the exercise price and the market
price of the Common Stock "profit". The table below attempts to show the
current economics of the warrants. In addition to the information
requested by the Staff, we have also included two columns that show both
the purchase price allocation the investors have in the shares underlying
the warrants as well as the current realizable profit based on the
difference between the current market price of the Company's Common Stock
and the holders' purchase price allocation. We have included these columns
because we believe they more accurately depict the underlying economics of
the Notes transaction.
- -------------------------------------------------------------------------------------------------
Current Current
Purchase market value Current realizable
Number of Price (based on realizable profit
shares Exercise Allocation $5.82 share profit (based on
underlying price of warrants price as of (based on purchase
the ($0.01 ($5.91 per September exercise price
warrants per share) share) 25, 2007) price) allocation)
- -------------------------------------------------------------------------------------------------
4,110,382 $41,103.82 $24,292,357.62 $23,992,423.24 $23,881,319.02 $(369,934.61)
- -------------------------------------------------------------------------------------------------
10. PLEASE PROVIDE US IN YOUR RESPONSE LETTER, WITH A VIEW TO DISCLOSURE IN
THE PROSPECTUS, A TABLE OF ALL PRIOR SECURITIES TRANSACTIONS BETWEEN YOU
(OR ANY OF YOUR PREDECESSORS) AND THE SELLING SHAREHOLDERS, ANY AFFILIATES
OF THE SELLING SHAREHOLDERS, OR ANY PERSON WITH WHOM ANY SELLING
Paul Fischer
Securities and Exchange Commission
September 27, 2007
Page 14
SHAREHOLDER HAS A CONTRACTUAL RELATIONSHIP REGARDING THE TRANSACTION (OR
ANY PREDECESSORS OF THOSE PERSONS), WITH THE TABLE INCLUDING THE FOLLOWING
INFORMATION DISCLOSED SEPARATELY FOR EACH TRANSACTION:
o THE DATE OF THE TRANSACTION;
o THE NUMBER OF SHARES OF THE CLASS OF SECURITIES SUBJECT TO THE
TRANSACTION THAT WERE OUTSTANDING PRIOR TO THE TRANSACTION;
o THE NUMBER OF SHARES OF THE CLASS OF SECURITIES SUBJECT TO THE
TRANSACTION THAT WERE OUTSTANDING PRIOR TO THE TRANSACTION AND HELD
BY PERSONS OTHER THAN THE SELLING SHAREHOLDERS, AFFILIATES OF THE
COMPANY, OR AFFILIATES OF THE SELLING SHAREHOLDERS;
o THE NUMBER OF SHARES OF THE CLASS OF SECURITIES SUBJECT TO THE
TRANSACTION THAT WERE ISSUED OR ISSUABLE IN CONNECTION WITH THE
TRANSACTION;
o THE PERCENTAGE OF TOTAL ISSUED AND OUTSTANDING SECURITIES THAT WERE
ISSUED OR ISSUABLE IN THE TRANSACTION (ASSUMING FULL ISSUANCE), WITH
THE PERCENTAGE CALCULATED BY TAKING THE NUMBER OF SHARES ISSUED OR
ISSUABLE IN CONNECTION WITH THE APPLICABLE TRANSACTION, AND DIVIDING
THAT NUMBER BY THE NUMBER OF SHARES ISSUED AND OUTSTANDING PRIOR TO
THE APPLICABLE TRANSACTION AND HELD BY PERSONS OTHER THAN THE
SELLING SHAREHOLDERS, AFFILIATES OF THE COMPANY, OR AFFILIATES OF
THE SELLING SHAREHOLDERS;
o THE MARKET PRICE PER SHARE OF THE CLASS OF SECURITIES SUBJECT TO THE
TRANSACTION IMMEDIATELY PRIOR TO THE TRANSACTION (REVERSE
SPLIT-ADJUSTED, IF NECESSARY); AND
o THE CURRENT MARKET PRICE PER SHARE OF THE CLASS OF SECURITIES
SUBJECT TO THE TRANSACTION (REVERSE SPLIT-ADJUSTED, IF NECESSARY).
Please see response #9. Other than as reflected in response #9, there have
been no additional securities transactions between the Company and the
Selling Stockholders since the formation of the Company.
11. IN A TABLE, PROVIDE DISCLOSURE THAT COMPARES:
o THE NUMBER OF SHARES OUTSTANDING PRIOR TO THE MARCH, 2007
CONVERTIBLE PREFERRED TRANSACTION THAT ARE HELD BY PERSONS OTHER
THAN THE SELLING SHAREHOLDERS, AFFILIATES OF THE COMPANY, AND
AFFILIATES OF THE SELLING SHAREHOLDERS;
Paul Fischer
Securities and Exchange Commission
September 27, 2007
Page 15
o THE NUMBER OF SHARES REGISTERED FOR RESALE BY THE SELLING
SHAREHOLDERS OR AFFILIATES OF THE SELLING SHAREHOLDERS IN PRIOR
REGISTRATION STATEMENTS;
o THE NUMBER OF SHARES REGISTERED FOR RESALE BY THE SELLING
SHAREHOLDERS OR AFFILIATES OF THE SELLING SHAREHOLDERS THAT CONTINUE
TO BE HELD BY THE SELLING SHAREHOLDER OR AFFILIATES OF THE SELLING
SHAREHOLDERS;
o THE NUMBER OF SHARES THAT HAVE BEEN SOLD IN REGISTERED RESALE
TRANSACTIONS BY THE SELLING SHAREHOLDERS OR AFFILIATES OF THE
SELLING SHAREHOLDERS; AND
o THE NUMBER OF SHARES REGISTERED FOR RESALE ON BEHALF OF THE SELLING
SHAREHOLDERS OR AFFILIATES OF THE SELLING SHAREHOLDERS IN THE
CURRENT TRANSACTION.
IN THIS ANALYSIS, THE CALCULATION OF THE NUMBER OF OUTSTANDING SHARES
SHOULD NOT INCLUDE ANY SECURITIES UNDERLYING ANY OUTSTANDING CONVERTIBLE
SECURITIES, OPTIONS, OR WARRANTS.
The Registration Statement has been revised on pages 34 - 37 to make
it clear in the selling stockholder table that the only shares owned
by the Selling Stockholders are as described above in response #9.
12. PLEASE DISCLOSE THE FOLLOWING INFORMATION:
o A MATERIALLY COMPLETE DESCRIPTION OF THE RELATIONSHIPS AND
ARRANGEMENTS THAT HAVE EXISTED IN THE PAST THREE YEARS OR ARE TO BE
PERFORMED IN THE FUTURE BETWEEN YOU (OR ANY OF YOUR PREDECESSORS)
AND THE SELLING SHAREHOLDERS, ANY AFFILIATES OF THE SELLING
SHAREHOLDERS, OR ANY PERSON WITH WHOM ANY SELLING SHAREHOLDER HAS A
CONTRACTUAL RELATIONSHIP REGARDING THE TRANSACTION (OR ANY
PREDECESSORS OF THOSE PERSONS) - THE INFORMATION PROVIDED SHOULD
INCLUDE, IN REASONABLE DETAIL, A COMPLETE DESCRIPTION OF THE RIGHTS
AND OBLIGATIONS OF THE PARTIES IN CONNECTION WITH THE SALE OF THE
CONVERTIBLE PREFERRED; AND
o COPIES OF ALL AGREEMENTS BETWEEN YOU (OR ANY OF YOUR PREDECESSORS)
AND THE SELLING SHAREHOLDERS, ANY AFFILIATES OF THE SELLING
SHAREHOLDERS, OR ANY PERSON WITH WHOM ANY SELLING SHAREHOLDER HAS A
CONTRACTUAL RELATIONSHIP REGARDING THE TRANSACTION (OR ANY
PREDECESSORS OF THOSE PERSONS) IN CONNECTION WITH THE SALE OF THE
CONVERTIBLE PREFERRED.
IF IT IS YOUR VIEW THAT SUCH A DESCRIPTION OF THE RELATIONSHIPS AND
ARRANGEMENTS BETWEEN AND AMONG THOSE PARTIES ALREADY IS PRESENTED IN THE
PROSPECTUS AND THAT ALL AGREEMENTS BETWEEN AND/OR AMONG THOSE PARTIES ARE
Paul Fischer
Securities and Exchange Commission
September 27, 2007
Page 16
INCLUDED AS EXHIBITS TO THE REGISTRATION STATEMENT, PLEASE PROVIDE US WITH
CONFIRMATION OF YOUR VIEW IN THIS REGARD.
The Company hereby confirms that a description of the relationships,
arrangements and agreements between and among the referenced parties
have been incorporated into the Registration Statement. In addition,
when required by Item 601 of the Regulation S-K, these agreements
have been filed as exhibits in the Company's past filings.
13. DISCLOSE WHETHER - BASED ON INFORMATION OBTAINED FROM THE SELLING
SHAREHOLDERS - THE SELLING SHAREHOLDERS HAVE AN EXISTING SHORT POSITION IN
YOUR COMMON STOCK AND, IF ANY SELLING SHAREHOLDER HAS AN EXISTING SHORT
POSITION IN YOUR STOCK, THE FOLLOWING ADDITIONAL INFORMATION:
o THE DATE ON WHICH EACH SUCH SELLING SHAREHOLDER ENTERED INTO THAT
SHORT POSITION; AND
o THE RELATIONSHIP OF THE DATE ON WHICH EACH SUCH SELLING SHAREHOLDER
ENTERED INTO THAT SHORT POSITION TO THE DATE OF THE ANNOUNCEMENT OF
THE MARCH, 2007 PRIVATE PLACEMENT AND THE FILING OF THE REGISTRATION
STATEMENT (E.G., BEFORE OR AFTER THE ANNOUNCEMENT OF THE MARCH, 2007
PRIVATE PLACEMENTS, BEFORE THE FILING OR AFTER THE FILING OF THE
REGISTRATION STATEMENT, ETC.).
Each Selling Stockholder represented and covenanted in the Securities
Purchase Agreement that it, and its affiliates, have not and will not
enter into any short positions during the period from which they were
approached by UBS Securities in connection with the Private Placement
until the public announcement of the Private Placement.
The Company has inquired of the Selling Stockholders whether such entities
have an existing short position in the Company's stock. Each of the
Selling Stockholders has advised the Company either that it does not hold
a short position in the Company's Common Stock or that such Selling
Stockholder is aware of the Staff's positions set forth in Item A.65 of
the SEC Telephone Interpretation Manual.
14. DISCLOSE IN A TABLE:
o THE GROSS PROCEEDS PAID OR PAYABLE TO YOU IN THE CONVERTIBLE
PREFERRED TRANSACTION;
o ALL PAYMENTS THAT HAVE BEEN MADE OR THAT MAY BE REQUIRED TO BE MADE
BY YOU THAT ARE DISCLOSED IN RESPONSE TO COMMENT TWO ABOVE;
o THE RESULTING NET PROCEEDS TO YOU; AND
Paul Fischer
Securities and Exchange Commission
September 27, 2007
Page 17
o THE COMBINED TOTAL POSSIBLE PROFIT TO BE REALIZED AS A RESULT OF ANY
CONVERSION DISCOUNTS REGARDING THE SECURITIES UNDERLYING THE
CONVERTIBLE PREFERRED AND ANY OTHER WARRANTS, OPTIONS, NOTES, OR
OTHER NEXTWAVE SECURITIES THAT ARE HELD BY THE SELLING SHAREHOLDERS
OR ANY AFFILIATES OF THE SELLING SHAREHOLDERS THAT IS DISCLOSED IN
RESPONSE TO COMMENTS EIGHT AND NINE.
FURTHER, PLEASE DISCLOSE - AS A PERCENTAGE - THE TOTAL AMOUNT OF ALL
POSSIBLE PAYMENTS AS DISCLOSED IN RESPONSE TO COMMENT TWO ABOVE AND THE
TOTAL POSSIBLE DISCOUNT TO THE MARKET PRICE OF THE SHARES UNDERLYING THE
CONVERTIBLE PREFERRED AS DISCLOSED IN RESPONSE TO COMMENT EIGHT DIVIDED BY
THE NET PROCEEDS TO YOU FROM THE SALE OF THE CONVERTIBLE PREFERRED.
As noted in response #2, the only fees paid in connection with the
issuance of the Preferred Shares were to UBS Securities LLC as
placement agent and to legal counsel. The Selling Stockholders did
not receive any compensation in connection with the Offering. Also,
as noted in response #1, the Preferred Shares have a fixed
conversion price and were issued with a conversion premium, not a
discount. As noted in response #9, the Company respectfully contends
that the sale of the Notes and related warrants is not related to
the Private Placement or the Resale.
INCORPORATION BY REFERENCE, PAGE 43
-----------------------------------
15. PLEASE REVISE TO SPECIFICALLY INCORPORATE BY REFERENCE YOUR MOST RECENT
FORM 10-Q.
The Registration Statement has been revised on page 46 in response
to the Staff's comment.
We would very much appreciate receiving the Staff's comments, if any, at
your earliest convenience. If it would expedite the review of the information
provided herein, please do not hesitate to call the undersigned at (212)
310-8239.
Sincerely yours,
/s/ Marita A. Makinen
-------------------------
Marita A. Makinen
cc: Paul Fischer
Larry Spirgel