Some Woosh shareholders miss out in US$5M sale to Craig Wireless

Friday 16th September 2011

Craig Wireless Systems, the Californian telecommunications company, has agreed to buy Woosh Wireless for US$5 million, purchasing the local company’s debt to make a call on the assets.

Under the terms of the deal, a Craig Wireless subsidiary will assume major investor Kuwait Finance House’s loan for some US$5.5 million, then make a call on that debt to take control of Woosh’s remaining assets, business and employees, it said in a statement to the Toronto Stock Exchange.

That will help Kuwait Finance recover some of its debt, which was at $18.8 million as at June 30, 2010, but will leave other shareholders, including U.S. venture capitalist Clarity Partners, original investor Todd Wireless, and launch partner Vodafone New Zealand out of the loop.

The deal is contingent on Craig Wireless acquiring certain spectrum rights owned by Woosh. The local company owns three spectrum management rights, two which expire in 2020, and the last which expires in 2030. Two other management rights expired in November last year. The rights were valued at $1.1 million as at June 30 last year.

Whoosh executive chairman Rod Inglis will put up US$500,000 to participate in the takeover and continue in the new team management.

Once the deal is completed, Woosh’s assets will be put into a new holding company 51% owned by Craig Wireless and 49% owned by Inglis.

Craig Wireless chief executive Boyd Craig said the deal will bolster his company’s spectrum holdings and give it a ready-made business in New Zealand.

Woosh made its first profit in the 2010 financial year of $1.3 million, and said the result gave investors confidence to stick with. It made a loss of $38.3 million a year earlier when it booked an impairment charge of $34.3 million.

The New Zealand company offers wireless internet to more than 25,000 customers and has been making noises about tapping 4G wireless networks for several years.

Craig Wireless holds spectrum rights in the U.S., Greece, Norway and New Zealand. The local spectrum licence began in 2009.

It made a net loss of US$2 million in the three months ended May 31. It has been on a buying spree after selling its Canadian spectrum assets in the 2010 financial year, leaving it with US$20.5 million of cash to spend.

The shares rose 1.5% to 33 Canadian cents on the TSX, and have shed almost a third over the past 12 months.

(BusinessDesk)

BusinessDesk.co.nz

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