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[FORM OF TERM SHEET FOR RESOLUTION OF NEXTWAVE CASES]
THE TRANSACTION: TOTAL VALUE OFFERED: $8.306 billion (assumes no surviving NextWave
liabilities or obligations)
FCC: $5.306 billion in cash, consisting of:
- $3.326 billion to pay off the FCC notes (net
present value at 11%)
- $0.991 billion for all unpaid interest on
the FCC notes*
- $0.989 billion "unjust enrichment"
payment**
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* Assumes June 30, 2000 payment upon grant of "long
form" licenses.
** Unjust enrichment payment calculated under 47 C.F.R.
Section 1.2111(d) for repayment of bidding credits.
EQUITYHOLDERS: $2.5 billion payable in Nextel common stock
CREDITORS: $0.5 billion in cash
Nextel would commence tender offers for NextWave common stock and creditor
claims under the FCC policy statements and rules regarding hostile tender offers
for entities holding FCC-issued licenses (the "FCC Tender Offer Procedures"). 59
RR 2d 1536 (Mar. 17, 1986). Based on the information available to Nextel
suggesting that approximately 250 million common equivalent NextWave common
shares are outstanding, the $2.5 billion equity purchase price equates to
approximately $10 per NextWave common share. Creditor claims tendered would be
purchased at 100% of the aggregate principal amount thereof plus accrued and
unpaid interest to the tender offer expiration date (assumed to be February 17,
2000) up to a maximum of $0.5 billion in the aggregate. Common stock and
creditor claims not tendered would be acquired in a clean-up merger effected
under an exit plan of reorganization. The FCC's claims would not be purchased in
the tender offer, but instead would be reinstated in full and repaid as
described below upon approval of the "long form" application.
FCC APPROVAL:
Simultaneously with the commencement of the tender offers, Nextel would file (1)
an application with the FCC for "short form" approval of an interim transfer of
NextWave's PCS licenses to a named independent trustee under the FCC Tender
Offer Procedures and (2) pending the outcome of the tender offers, an
application with the FCC for final,
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"long form" approval of the permanent transfer of such licenses to Nextel.
Nextel would simultaneously obtain a declaratory ruling from the FCC to the
effect that, under the FCC rules (i) the FCC could grant waivers of the
designated entity holding period to non-designated entities otherwise qualified
to hold the licenses which pay the FCC the full amount owed by the designated
entity plus any "unjust enrichment" payment, (ii) the FCC could allow creditors
and equity holders to receive payment prior to FCC approval of the "long form"
application as it would in a tender offer for control of a company not in
bankruptcy, and (iii) the grant of the PCS licenses to a designated entity in
bankruptcy will not be revoked following purchase of the shares and the deposit
of the shares into a trust by reason of the prior conduct of the designated
entity, including the designated entity's failure to meet the payment conditions
of the license.
TIMING:
The "short form" FCC approval is expected to be received in 45 days, and the
declaratory ruling from the FCC is expected to be obtained substantially
simultaneously (Nextel is in the process of initiating the declaratory ruling
proceedings in advance of initiating the tender offers). Thus, based on the
schedule proposed below, the tender offers would expire, and tendering equity
and debt holders would receive payment, in February 2000. Nextel would take the
risk of FCC "long form" approval. The specific timetable is:*
Time Event
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12-20-99 Declaratory rulings filed with FCC
Prior to
12-31-99 SEC registration statement filed and cleared
1-3-00 Tender offers commence; FCC applications filed;
HSR Act, etc. filings made
2-17-00 Tender offer expiration date and tender offer
payments made; short form approval granted;
confirmation of exit POR filed with Bankruptcy Court;
acceptance of tenders and distributions to tendering
equity and debt claims holders
6-30-00 Long form approval granted; exit POR completed
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* Assumes all relevant conditions to all events satisfied and no delaying
factors are present.
COMPETITIVE BIDS:
Other parties would be free to pursue competing transactions (including the
Global Crossing transaction) during Nextel's tender offers and Nextel would
receive no break-up or other compensation from NextWave if its tender offers
were unsuccessful. Tendering shareholders and claim holders will have withdrawal
rights to permit competing bids to be made.
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CONDITIONS:
The tender offers would be conditioned on:
- Ninety percent (90%) in voting power, calculated as of the expiration date,
of the outstanding shares of each series of NextWave common stock being
validly tendered and not withdrawn;
- Grant of the "short form" approval from the FCC and receipt of the
declaratory rulings as described above;
- The establishment of arrangements to permit an exit plan of reorganization
to be consummated on terms and conditions reasonably satisfactory to Nextel
and consistent with the financial terms set forth above;
- The number of fully diluted NextWave shares and total amount of rejection
damages, etc. being determined so that the exact per share/claim tender
offer prices can be fixed consistent with the financial terms hereof; and
- Termination of the waiting period requirements of the Hart-Scott-Rodino
Act, effectiveness of the registration statement for the Nextel shares to
be issued in the tender offer and other customary tender offer conditions
(Nextel is in the process of initiating the required regulatory filings).
As in the case of any unilateral tender offer, Nextel could waive any condition,
except that Nextel would not waive the FCC approval conditions and regulatory
requirements specified above.
EXIT PLAN OF
REORGANIZATION:
In connection with the tender offers and subject to bankruptcy law requirements,
Nextel would submit a plan of reorganization to the bankruptcy court under
which:
- All creditor claims not purchased in the tender offer would be fully
satisfied by payment in cash of the lesser of (x) 100% of the aggregate
principal amount thereof, plus accrued and unpaid interest to and including
the effective date of the plan, and (y) such claim's proportional
percentage share (as determined by the Bankruptcy Court) of all creditor
claims not purchased in the tender offer and not paid pursuant to clause
(x), multiplied by the remaining cash amount (i.e., $500 million less the
aggregate of all payments made for claims purchased in the tender offer and
for all claims paid pursuant to clause (x) above) such that the total
amount paid for all claims purchased in the tender or satisfied under the
exit plan of reorganization will not exceed $0.5 billion in the aggregate.
The exit plan of reorganization also will provide that all liabilities and
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obligations of the NextWave debtors will be released and extinguished
absolutely upon final consummation (i.e., payment to the FCC);
- NextWave would be merged with a wholly owned subsidiary of Nextel; and
- Any equity interests in NextWave not exchanged in the tender offer would be
converted in the merger into the right to receive a number of shares of
Nextel common stock at the same ratio at which NextWave shares were
exchanged in the tender offer (or, at Nextel's election, a cash per share
price equal to the value of the Nextel shares exchanged in the tender
offer, or approximately $10 based on the assumptions set forth above).
Effectiveness of Nextel's exit plan of reorganization would be conditioned upon
receipt of "long form" approval from the FCC and consummation of such plan
pursuant to the final order of the Bankruptcy Court.
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