Up In Smoke
Teligent faces stock de-listing, credit defaults
By Jeanie Stokes
from the April 16, 2001 issue of Broadband Week
While April 16 remains the deadline most taxpayers are worried about this time of year, fixed wireless provider Teligent Inc. has had to confront two deadlines later in the month that likely will determine its fate.
The Vienna, Va.-based competitive local exchange carrier that's been seeking new sources of capital for its expanding network since August, has been running out of money, options and time.
Teligent told the Securities and Exchange Commission on March 20 that the NASDAQ National Market would delist its shares next week unless the company could meet either the minimum "net tangible assets" or the minimum "bid price" requirements. At mid-month Teligent indicated it met neither criteria and also might lose access to funding it's already secured as a result of its low stock price.
Early in the year, the company amended its fully drawn-down $800 credit agreement with the Chase Manhattan Bank, Goldman Sachs Credit Partners, Toronto Dominion Bank and other lenders. As part of the amendment, Teligent had to nail down by April 30 at least $250 million in vendor financing and another $100 million in funding backed by convertible notes, or it would be in default of its credit facility.
Teligent CEO Alex Mandl told Broadband Week last month that he was optimistic the company would be able to announce a package of debt, equity and vendor financing by the end of April.
The company's annual SEC report, filed March 29, paints a grimmer picture. "There can be no assurance that we will execute either the vendor financing or convertible notes by such date or at all. In addition, the company has a new financial covenant that requires compliance effect June 30, 2001 for which there can be no assurance," the 10-K filing states.
"We are still vigorously pursuing financing," company spokeswoman Tita Thompson says. She adds that the company has "no plans to file for bankruptcy."
Teligent delivers fixed wireless broadband services to more than 4,100 office buildings nationwide, carrying voice, data and video signals that travel from a rooftop antenna to the building's internal wiring system. The company laid off 172 of its more than 2,700 employees in February and expects to take a $600,000 charge against first-quarter results for the cutbacks.
One thing is clear from the company's SEC filings: Teligent, which says it plans to make between $220 million and $250 million in capital investments this year, is burning cash at a significant rate for a company in trouble. Its available cash, cash equivalents and short-term investments as of March 26 was $194 million, down from $351 million on Jan. 8. That's still enough to keep the company afloat through June, but Teligent isn't offering any solutions beyond the end of the second quarter.
"We need additional sources of funding to finance our operations starting in the third quarter," the company told the SEC.
Teligent has pinned its hope for continued operations on a $250 million private equity placement with Rose Glen Capital Management LP it secured in December. Analysts have criticized the terms of the private placement because it places few restrictions on what the investor can do with the Teligent shares it acquires.
That agreement, if fully drawn down, would give the company enough money to operate through the end of the year. But the 99 percent decline in Teligent's share price this year means the company no longer meets the conditions under which it can sell shares to Rose Glen. In order to draw against the Rose Glen deal, Teligent's stock must be above $2 a share. Teligent hasn't traded above $2 since mid-February.
NASDAQ requires companies listed on its national market to have minimum net tangible assets of at least $2 million and a minimum bid price of at least $1 a share.
If NASDAQ delists the stock, Teligent says it will appeal the action and request an extension, a process that could take several months. Failing that, the company plans to try to keep its shares listed on the NASDAQ SmallCap Market, which has lower listing requirements. Moving to the small cap market could affect adversely both the share price and the liquidity of the shares, which were trading under 50 cents a share recently.
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