Leap Wireless announced that its wholly owned subsidiary, Cricket Communications, is acquiring all remaining interests in Denali Spectrum in a deal that will provide Cricket with ownership and control of Denali’s Greater Chicago and Southern Wisconsin markets. Cricket currently owns an 82.5% non-controlling membership interest in Denali, and under the purchase agreement, it will acquire the remaining 17.5% controlling membership interest currently held by Denali Spectrum Manager (DSM).
Also as part of the deal, Denali will contribute its non-operating wireless licenses and spectrum lease to Savary Island Wireless, a newly-formed company that will apply to obtain its licenses as a “very small business” designated entity under applicable FCC rules.
Denali will get 85% non-controlling membership interest in the new company and Ring Island Wireless will contribute cash to the venture in exchange for a remaining 15% controlling membership interest. In total, Savary Island and its subsidiaries will assume approximately $211.6 million of the outstanding senior secured debt owed by Denali to Cricket. The closing of the transactions under the contribution agreement will occur immediately prior to the closing of Cricket’s purchase of DSM’s membership interest in Denali.
Finally, upon the closing of transaction, Savary Island will enter into a management services agreement with Cricket, pursuant to which Cricket will provide management and administrative services to Savary Island and its subsidiaries, while DSM will cease to own any direct or indirect equity interests in Denali or Savary Island.