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Unwired Meets Funding Commitments Ensuring WiMAX Network |
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Written by Adam Gosling
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Tuesday, 01 May 2007 |
Australian Wireless Broabdand ISP,
Unwired, has struck an agreement with US-based investment fund Cornell
Capital Partners for additional capital of A$15 million in stand by
equity. The ISP can issue the fund with up to A$15 million worth of shares over the next 60 months.
The deal means, however, that the
potential WiMAX carrier has met the capital raising commitments it made
to Intel and Mitsui, locking in their respective investments in the
company and all but guaranteeing Unwired will launch a mobile WiMAX
broadband network in early 2008.
Upon securing the stand-by equity
facility, Mitsui & Co., Ltd will now commit A$5 million to Unwired
under the agreement they reached last year, which was dependent on Unwired meeting its funding commitment to Intel.
Intel, in turn had invested $37 million in Unwired
back in August 2005 at which point the two companies
signed an agreement to collaborate on th e roll-out of WiMAX network in
Australia. As part of that deal Unwired had committed to raising a further A$23 million to
kick in with Intel's contribution.
Unwired now has a market cap of A$71
million held in 254.2 million issued shares and it has raised A$25.4
million in funds since September 2005, locking in Intel's money and
pulling the coupon rate for the Intel investment back to the original
fiure of 4.25% p.a, while ensuring no further increases will occur.
In real terms what this all means for the
immediate future of the company is that it will save around half a
million a year in interest payments, certainly taking some, if not
all, of the pressure of Unwired's Profit and Loss statement.
It also means is the company has the A$5 million from
the Mitsui investment thanks to a deal from last August. Then there is the new A$15 million standby
equity available from Cornell. And finally, there is a A$5.4 million
lease facility announced in October 2006 for part of Uniwred's base station equipment arranged by
Meridien International Capital, but not reported on this site.
In all that is A$25.4 million in funds
at the company's disposal to help take its business to the next level,
once mobile WiMAX becomes a viable market. Unwired currently operates a
small metropolitan networks in Sydney and Melbourne which are both
based on a proprietary wireless broadband standard. The copmany's
intention has always been to move to WiMAX, at the 'appropriate time'
as it is the licensee for the bulk of the suitable WiMAX spectrum in
Australia's metropolitan areas.
Last year Unwired announced an alliance (AUSalliance) with regional
network provider and Pay TV company Austar and regional backhaul
operator Soul to build a high speed wireless broadband network to
service both fixed and mobile markets in metropolitan and regional
Australia.
"With these funding facilities in
place the Company is ready for any regional network build under its
AUSalliance agreement and network transition to mobile WiMAX. This
transition ensures our network and our business are WiMAX ready when
laptops and other mobile devices with mobile WiMAX chops become
commercially available in early 2008," said Unwired's CEO David
Spence.
To access the equity facility with
Cornell, Unwired has the option of issuing shares to the fund over
the next 60 months. This would be restricted to a maximum A$250,000 worth of
shares in any given 10 trading day period.
The shares would be (sold) to Cornell
at the lowest daily volume weighted average price of Unwired shares
on each of the 10 trading days which follow an advance notice by
Unwired, subject to a minimum price set by Unwired. Less 4 per cent
"commission".
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