Leap Shareholders Approve $1.2 Billion Takeover Bid from AT&T
Published on: 31st Oct 2013
By: Ian Mansfield
Shareholders at USA based Leap Wireless have voted to approve a proposed US$1.2 billion merger with AT T.
More than 99% of the votes cast at Wednesday's special meeting were voted in favor of the proposed merger agreement and over 78% of the votes cast voted in favor of the advisory proposal regarding executive compensation.
"We are pleased with the outcome of yesterday's vote and thank all of our stockholders for their support," said Doug Hutcheson, Leap's chief executive officer. "Stockholder approval is an important milestone on our path to completing the merger with AT&T. I'd like to thank the dedicated representatives from both companies who are working hard to complete the transaction."
The transaction remains subject to customary closing conditions, including the review by the Federal Communications Commission and the Department of Justice.
As of April 15, 2013, Leap had $2.8 billion of net debt, but it is also sitting on federal and state net operating loss carryforwards (referred to as "NOLs") of approximately $2.7 billion and $2.1 billion, respectively, which could be used to reduce future federal and state income tax obligations.
Back in 2011, the company enacted a poison-pill that would essentially prevent any hostile bidder buying the company simply to get hold of the tax credits. In a separate statement, Leap said that the provision still applies -- except for AT&T.
In essence, including debt, AT&T is paying US$4 billion to buy a company that is sitting on tax credits worth US$4.8 billion that can be offset against future profits.
Leap shareholders will also receive a contingent right entitling them to the net proceeds received on the sale of Leap's 700 Mhz "A Block" spectrum in Chicago, which Leap purchased for $204 million in August 2012.
Leap currently operates -- under the Cricket brand -- a CDMA network, as well as a LTE network covering 21 million people in these areas, and has 3,400 employees.
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