Exhibit 99.6
CAI WIRELESS SYSTEMS, INC.
INTRODUCTION TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following unaudited pro forma financial information of CAI Wireless
Systems, Inc. ("CAI" or the "Company") consists of the unaudited Pro Forma
Balance Sheet as of September 30, 1998. The pro forma adjustments reflect the
financial restructuring transactions under Chapter 11 of the U.S. Bankruptcy
Code which were consummated on October 14, 1998 as if they had occurred on
September 30, 1998.
Such transactions include: 1) the issuance by CAI of $100,000,000
(aggregate principal discounted amount at issuance) of 13% Senior Notes due
2004 to holders of CAI's previously issued 12.25% Senior Notes due 2002 in the
aggregate principal amount of $275,000,000, 2) the cancellation of 40,543,039
previously issued and outstanding shares of CAI common stock, without par
value, and the issuance of 17,241,379 shares of CAI common stock, par value
$.01 per share, 3) the consummation of an $80,000,000 financing facility (the
"Exit Facility") and 4) the application of fresh-start reporting in accordance
with Statement of Position 90-7 of the American Institute of Certified Public
Accountants. Under fresh-start accounting, the reorganization value of CAI has
been allocated to its assets and liabilities on a basis substantially
consistent with purchase accounting. The portion of reorganization value not
attributable to specific assets is recorded on the balance sheet as
"Reorganization Value in Excess of Amounts Allocable to Identifiable Assets."
At the Exit Facility closing, the Company paid $1,800,000 in commitment
fees to Merrill Lynch Global Allocation Fund, Inc., the Exit Facility lender
("MLGAF") and paid $61,900,000 to MLGAF in repayment of the outstanding
principal, interest and commitment fees on the DIP Facility made available to
CAI during its Chapter 11 case. CAI has accrued an additional $2,500,000 in
commitment fees payable to MLGAF at the maturity of the Exit Facility. The
balance of the net proceeds provided to CAI under the Exit Facility will be
classified as Restricted Cash and used to fund CAI's general operating
requirements in accordance with a budget approved by MLGAF.
CAI WIRELESS SYSTEMS, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
Predecessor Exit Debt Fresh-Start Reorganized
ENTITY REFINANCING [i] DISCHARGE [ii] ADJUSTMENTS COMPANY
----------- ----------- --------- ----------- -----------
ASSETS
Cash and cash equivalents $ 1,339 $ - $ - $ - $ 1,339
Restricted cash and cash
equivalents 11,204 15,953 a,b - - 27,157
Debt service escrow 16,914 - (16,914) - c -
Subscriber receivables, net 702 - - - 702
Prepaid expenses 549 - - - 549
Property and equipment, net 41,460 - - 264 41,724
Wireless channel rights, net 187,730 - - 17,113 204,843
Investment in TelQuest
Satellite Services LLC 1,220 - - - 1,220
Goodwill, net 22,066 - - (22,066) -
Reorganization value in
excess of amounts allocable
to identifiable assets - - - 38,077 38,077
Debt financing costs, net 5,838 4,300 b,h - (5,838) d 4,300
Other assets 3,060 - - (393) 2,667
------- ------- ------- ------- -------
TOTAL ASSETS $292,082 $ 20,253 $(16,914) $ 27,157 $322,578
======== ========= ======== ======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
Liabilities Not Subject to
Compromise
Accounts payable $ 3,125 $ (600) b $ - $ - $ 2,525
Accrued expenses 22,739 853 b (14,499) 647 b 9,740
Wireless channel rights
obligations 2,922 - - - 2,922
Interim debt financing 60,000 2,074 a,b - - 62,074
Long-term notes 3,765 - 100,000 - c,f 103,765
------- ------ ------- ------ -------
TOTAL LIABILITIES 92,551 2,327 85,501 647 181,026
------- ------ ------- ------ -------
Liabilities Subject to
Compromise
Long-term notes 307,793 - (307,793) - -
Stockholders' Equity (Deficit)
Preferred stock - - - - -
Common stock 275,771 22 h 150 (275,771) e 172
Additional paid-in capital 101,712 17,904 h 119,872 (98,108) g 141,380
Accumulated deficit (485,745) - 85,356 400,389 g -
------- ------ ------- ------ -------
TOTAL EQUITY (108,262) 17,926 205,378 26,510 141,552
------- ------ ------- ------ -------
TOTAL LIABILITIES AND EQUITY $292,082 $ 20,253 $(16,914) $ 27,157 $322,578
======== ========= ======== ======== ========
See Notes to Pro Forma Consolidated Balance Sheet.
CAI WIRELESS SYSTEMS, INC.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
(UNAUDITED)
[i] Adjustments to reflect the Company's refinancing transactions, including:
a. Consummation of an $80,000,000 Exit Facility with MLGAF.
b. Reflects the use of the proceeds from the Exit Facility to (i) repay
the outstanding $60,000,000 DIP Facility provided by MLGAF, including
a $60,000,000 principal payment, $1,300,000 interest payment and a
$600,000 commitment fee, and (ii) pay a $1,800,000 commitment fee to
MLGAF for the Exit Facility. The balance of the proceeds
(approximately $16,000,000) will be used by the Company to fund its
general operating requirements in accordance with the approved budget.
An additional $2,500,000 commitment fee is payable to MLGAF at the
maturity of the Exit Facility.
[ii] Adjustments to reflect the restructuring transactions as the Company
emerges from Chapter 11, including:
c. The cancellation of $275,000,000 of indebtedness of CAI previously
evidenced by CAI's 12.25% Senior Notes due 2002 (the "Old Senior
Notes") in exchange for $100,000,000 aggregate principal discounted
amount at issuance of 13% Senior Notes due 2004 of CAI, the payment
of the semiannual interest on the Old Senior Notes from the debt
service escrow account, plus additional interest accrued on that
semiannual payment from September 16, 1998 to September 30, 1998 and
the issuance of New Common Stock (described in (f) below).
d. Reflects the write-off of capitalized costs associated with the
original issuance of the Old Senior Notes.
e. Reflects the cancellation of 40,543,039 shares of CAI Common Stock,
without par value (the "Old Common Stock").
f. Reflects the issuance by CAI of 15,000,000 shares of common stock,
$.01 par value (the "New Common Stock"), of which 13,650,000 shares
were issued on a pro rata basis to the holders of Old Senior Notes and
1,350,000 shares were issued on a pro rata basis to holders of certain
subordinated indebtedness of CAI. The subordinated indebtedness and
any interest accrued thereon was canceled in this transaction.
g. Indicates the recapitalization of the Company resulting from the
restructuring transactions described above.
h. Reflects the issuance by CAI of 2,241,379 shares of New Common Stock
to MLGAF as a fee for providing the Exit Facility.