EXHIBIT 99.1
MOTIENT
Moderator: Chris Downie
July 14, 2004
9:00 am CT
Operator: Good morning. My name is (Marcia) and I will be your
conference facilitator today. At this time, I would like
to welcome everyone to the Motient Investor Conference
Call. All lines have been placed on mute to prevent any
background noise. If you have a question at any time
during the call, simply press star, then the number 1 on
your telephone keypad. If you would like to withdraw your
question, press the pound key. Thank you. Mr. Downie, you
may begin your conference.
Chris Downie: Thank you. Good morning. My name is Chris Downie and I
am the Executive Vice President and COO of Motient
Corporation. First off, thank you for joining me, Robert
Macklin, our General Counsel, and (Jared) Abbruzzese, a
representative from Communications Technology Advisors,
our chief restructuring entity on this call. Before I get
into any details, I will ask (Rob) to get a few of the
preliminaries out of the way.
Robert Macklin: Thanks Chris. For those of you who may be listening,
please be aware that with the exception of any historical
information that we may discuss, some of our statements
may be forward-looking statements that involve risk and
uncertainties that cause our actual results to differ
materially from our statements today. In addition, we will
be limiting our remarks to information previously
disclosed in our public filings with the SEC.
We will also be releasing a transcript of this call
immediately after its conclusion, so please be aware that
your questions may be transcribed for public release.
Chris will briefly discuss several matters, after which we
will hold a question and answer session, which again will
be limited to matters and information previously disclosed
in our public filings.
1
Chris Downie: Thanks (Rob). As you are all aware, Motient is a
nationwide provider of two-way wireless mobile data
services and mobile Internet services. Our customers use
our network and applications for email messaging and
enterprise data communication services. Our network is
designed to offer a broad array of wireless data services
such as two-way mobile Internet services, telemetry
systems, and mobile data and fleet management systems.
As of June 15, 2004, our network covers a geographic area
populated by more than 225 million people, and it's
comprised of over 1,200 base stations that provide service
to 475 of the nation's largest cities and towns. As of
March 31, 2004, there were approximately 194,000 user
devices registered on our network and approximately
108,000 user devices with active usage on our network.
In addition to selling messaging services that use our own
network, we are a national premier dealer for T-Mobile
USA, and an authorized agent for Verizon Wireless. Under
our agreements with these providers, we sell nationwide
network subscriptions for T-Mobile and Verizon. These
agreements allow us to sell and promote wireless email and
wireless Internet applications to enterprise accounts on
accounts with greater capacity and speed than our own, and
that are voice capable.
2
In addition to our operating business, we also currently
own a 29.5% interest in Mobile Satellite Ventures LP, or
MSV, a mobile satellite services provider, assuming the
conversion of all outstanding convertible notes. For more
information on these aspects of our business, please
consult our public filings with the SEC, such as our Form
10Q for the quarter ended March 31, 2004, which was filed
on July 2, 2004.
As a matter of fact, when we filed the Form 10Q on July 2,
we became current in our filing obligations under the
Securities Exchange Act of 1934, for the first time since
shortly after we emerged from bankruptcy in May of 2002.
As we have previously discussed in our SEC filings, we
fell behind in our reporting under the Exchange Act
because of a disagreement with our previous auditors over
the accounting treatment of some transactions that
occurred in 2000 and 2001. By the time we had resolved
those accounting issues, we were about a year behind in
our reporting.
These last few months we've caught up, and with the filing
of our First Quarter 2004 10Q on July 2, we are now
current. Management, of course, intends to remain current
in our Exchange Act reporting obligations in the future.
If you want all the details regarding these accounting
matters, please see our 10K for the year ended December
31, 2002, filed in March of this year.
Right after we filed the 10Q on July 2, we also filed two
registration statements, one on Form S8 and one on Form
S1. We filed the S8 to register some shares that had been
issued to employees who exercised employee stock options.
These shares were registered because they had been issued
when we weren't current with our Exchange Act reporting,
and therefore we had to issue these shares as restricted
shares at that time.
As for the S1, which the SEC declared effective on July
13, or yesterday, we filed it in order to register shares
that we had issued in previous transactions, mainly to
private placements of our common stock in April and July
3
of this year, and some other shares that were otherwise
restricted in some way. The S1 also registers common stock
that may be issued in the future if the holders of certain
warrants that we issued in the past decide to exercise
their warrants.
For the most part, these shares had contractual
registration rights of one form or another that required
us to register them. Since we couldn't file a registration
statement for these shares and warrants during the period
we weren't current in our SEC reporting, we had a little
over 15 million shares that needed to be registered.
Typically, a registration such as this would be done on a
Form S3 and not on an S1, but since we're current in our -
since we weren't current in our SEC reporting, we had to
file the S1 rather than the more customary S3.
What this S1 does is to register the shares owned by the
stockholders listed in the S1. To be clear, Motient is not
using the S1 as a vehicle to issue new shares. We're
merely registering shares that we had already issued, up
to and including the shares issued in the July 1 private
placement. The holders of these shares may or may not
choose to sell their shares, but the choice is theirs and
theirs alone. We have no control over that decision.
Among the shares being registered on the S1 are the shares
that we issued in a private placement on July 1 of this
year. In that placement, the investors purchased 3.5
million shares of Motient's common stock at a price of
$8.57 per share, yielding gross proceeds of about $30
million. This price per share represented a 15% discount
to the closing price of our stock the day before we signed
a heavily negotiated letter of intent with the investors.
Since the letter of intent was signed on June 25 and the
stock had closed at $10.09 on June 24, the private
placement closed at $8.50 per share. If you're interested
in learning more about this transaction, please see our
quarterly report on Form 10Q for the quarter ended March
31, 2004, again filed on July 2, 2004.
4
If you take a look at that 10Q, you'll also see that we're
working hard to preserve our cash by cutting costs and
maximizing operational efficiency. We're also working to
pay down debt to reduce interest expense. In that vein, we
have taken some specific actions that I'll describe
briefly here, but that are described more fully in the 10Q
as well as our other SEC filings. The details of these
cost-cutting measures are more extensive than I have time
to describe here, so please make sure you read our SEC
filings, as they present a more complete picture of our
cost-cutting actions than I can give you in the limited
time I have on this call.
In February of 2004, we eliminated about 1/3 of our
workforce and reduced employee and related expenditures by
about $400,000 per month. We also settled some of our
vendor obligations, such as our obligations with Motorola
and Hewlett Packard. The full amount due and owing under
these agreements was a combined $6.8 million, but we were
able to satisfy these obligations by paying a combined
$3.9 million in cash and issuing a warrant to Motorola to
purchase 200,000 shares of our common stock at a price of
$8.68 per share.
As part of the Hewlett Packard deal, we were able to
cancel and retain the funds from a $1.1 million letter of
credit that collateralized the capital lease for the
benefit of Hewlett Packard.
We are also in the process of assessing our wireless data
network to reduce network operating costs. This
rationalization, as we call it, encompasses among other
things reducing unneeded capacity by deconstructing
underutilized and unprofitable base stations and
deconstructing base stations that pass an immaterial
amount of customer data traffic. In some cases, these base
stations were originally constructed specifically to serve
customers with nationwide requirements that are no longer
customers.
5
Additionally, we have recently asked the FCC to relocate
Motient into the so-called upper 800-megahertz band as
part of the 800-megahertz rebanding effort known as the
Consensus Plan. This would group the frequencies that
Motient uses to operate its wireless data network next to
other commercial providers in the 800-megahertz band.
Finally, I just wanted to note that we're currently listed
on the pink sheets under the symbol MNCP. Now that we are
current with our financial reporting, we may be eligible
to be listed on a national stock exchange of some sort,
such as NASDAQ or the American Stock Exchange, but for the
time being the company hasn't made any decisions in this
regard. We will, of course, make a public announcement if
or when we should decide to become listed.
At this point, I'd like to open the floor up to any
questions that you may have. Please give your questions to
the operator, if you have not already done so, and we will
attempt to answer the questions if it - if appropriate.
We're receiving the questions on another line, so if you
don't mind holding, we will address the questions as soon
as they get relayed to us.
(Connie): I have a question. The question is from Ethan Swartz from
CRT Capital. And the first question is, what is the
timeframe for construction of the ATC network?
Robert Macklin: Okay.
6
(Connie): And the second question is, is the company in direct
negotiations with Inmarsat?
Chris Downie: There's a question from (Ethan Schwartz) from CRT. The
question was -what is the timeframe for ATC construction,
and the second question was - is the company in direct
negotiations with Inmarsat. I will ask (Jerry) Abbruzzese
to answer that question, just keep in mind that the
company has 29.5% interest in MSV and MSV is a private
company, so we will try if possible to address that
question, but we might not be able to. (Jerry)?
J Abbruzzese: The first one regarding ATC, which is the ancillary
terrestrial component construction, we understand MSV has
gone back to the FCC and asked for some additional changes
to the authorization which MSV feels will make it more
compatible with other potential strategic entities.
And from an operational perspective the authorization and
the regulation that has been issued by the FCC so far does
make MSV or that whole ATC a viable commercial product,
but it's now is the question of degrees and capabilities.
The current plan for MSV is to continue to pursue expanded
capabilities with the FCC all the while meeting its
requirements and build requirements that the FCC has laid
out for it. And I really don't want to go too much beyond
that. As (Chris) reminded everybody, it's a private
company and we are not looking to talk on behalf of that
company, merely discussing what is out in the public
domain currently.
Regarding Inmarsat, Inmarsat is currently an important
entity. They have spectrum that is adjacent to MSV and
there are wide ranging discussions that have been going on
with all parties related to ATC and the satellite spectrum
that is contiguous to MSV. So I hope that answers the
question without getting into something that we shouldn't
be talking about.
7
Chris Downie: Okay. This is Chris again. The second question we
received is that - will any of the proceeds that we have
raised in the recent equity transactions be used to make
investments in MSV. There are, you know, no plans or
decisions at this juncture with regards to using those
proceeds for those investments. Obviously if that changes
we will make public announcements accordingly.
J Abbruzzese: Chris, are we waiting for other questions?
Chris Downie: Yes, we're getting questions on another line right now.
Thanks for everybody's patience.
We have a couple of additional questions. The first
question relates to our cash run rate now, at the
beginning of the year and a year ago. Given some of the
complexities in that answer, I'm simply going to point
that person to our public filings. I'm not going to be
able to provide any more details with regards to the
current cash run rate outside of our public financials.
The second question, are there plans to reduce our Rare
and CSFB data obligations with the proceeds from this
transaction? As we stated in our press release that we
issued on July 2, there is an intention to use proceeds
from this transaction to reduce corporate debt. Any
specific decisions with regards to Rare and CSFB are still
under consideration and we'll make announcements in that
regard as soon as appropriate.
8
Robert Macklin: Chris, this is (Rob). We have another question
regarding the intents of plans in the 800 megahertz
rebanding efforts. As we've indicated in our public
filings, we've requested rebanding into the so-called
upper 800 part of the 800 megahertz band next to other
commercial providers.
The FCC has not issued any sort of final order on that.
The FCC publicly issued a summary plan and an order
adopting the broad strokes of the consensus plan. However,
no specifics as they relate to Motient have yet been
issued. We will of course announce publicly what will
happen if and when we actually do get any specifics on
that matter.
Chris Downie: We have time for probably a couple more questions. We're
in the process of getting them on another line here.
Again, thanks for your continued patience.
Our next question is - do we have any 800-megahertz
frequencis currently up for sale? There have been no
announcements with regards to additional frequencies for
sale. We will make appropriate announcements in that
regard to the extent that additional frequency sales
arise.
My apologies. We're experiencing some technical
difficulties getting some of the questions in here. Given
the time, we're going to probably just try to answer one
more question to the extent that we can get it in here. I
apologize for this delay and thank you for your patience.
We have one last question. Again, I apologize for the
delay. The question is - is there any additional need for
outside investment in MSV and if so would Motient
co-invest to - in order not to be diluted in this
investment? As we said earlier, unfortunately MSV is a
private company so we're limited in our ability to comment
on anything related to them that hasn't been publicly
disclosed.
I'm not exactly sure if Jerry could like to comment,
(Jerry).
9
J Abbruzzese: Let me answer, Chris. Clearly, the authorizations as
granted by the FCC contemplate the construction and
launching of satellites at some point in the future. MSV
currently has two satellites that are operational. Both
satellites have a period of life left in them that, you
know, is substantial.
So I think one could appreciate that at some point in time
there will be a necessity for MSV to raise additional
capital simply because it's in the business that is
somewhat capital intensive. As to the timing of that and
the scope of that, that will be determined by the MSV
board as they progress.
One of the advantages that MSV does have in the space it's
in, it does have two satellites operational today which
under the rule of the FCC are a requirement for being
licensed, that you have to have satellites launched. And
so I do think, you know, that is a good thing with regards
to MSV.
And, you know Chris, I know this is the last question so I
wanted to make a quick statement as an advisor to the
Company. Everybody should be very clear that this
management and this Company, Motient, is extraordinarily
focused on maximizing its operational efficiencies. To
that regard, it's constantly reviewing its cost-cutting
efforts and its operational efficiencies and its portfolio
of assets and how best to maximize the value of those
assets.
In that regard, clearly one of the biggest assets and the
most important asset of the Company arguably could - would
be its holdings in MSV and in that regard, Motient is a
very active, you know, representative and owner of MSV and
very involved in ensuring that MSV goes forward and
provides the maximum return possible for all of the
stakeholders of Motient.
10
I just want to make sure everybody understands clearly
that's a high priority and high focus of all of us that
are involved in the Company.
Chris Downie: Thanks, (Jerry). Again, thanks for everybody's patience
on this call. My apologies for the technical difficulties.
We'll try and do it better next time and just hope
everybody has a great day. Thank you.
Operator: This concludes today's conference call. You may now
disconnect.
END
11