-- initially be convertible at a conversion price of $.08 per share
($1.20 after giving effect to the reverse stock split) into a total of
approximately 67.6% of the Company's outstanding Common Stock (assuming no
conversion of the Company's Series B Preferred Stock); and
-- represent approximately 61.8% of the Company's outstanding voting
power.
In connection with the transaction, Oak has agreed to include a 10% carve
out for the benefit of common stockholders from the net proceeds of any
liquidation in the terms of the Series B and Series C Preferred Stock. As
a result of the new investment, Oak will have voting control of the Company
following the sale and will be entitled to appoint a majority of its Board
of Directors. A special meeting of shareholders will be called to hold an
advisory vote on the transaction as described below.
On September 1, 2009, the closing price of the Company's common stock was
$.08 per share.
Eric Stonestrom, Airspan's President and Chief Executive Officer, stated,
"We are very pleased by Oak's timely investment in the Company. We look
forward to continuing our working relationship with Oak as the Company's
new majority owner." Mr. Stonestrom continued, "This new investment by our
largest shareholder would resolve our current funding issues and allow us
time to restructure the Company to weather the current downturn."
Bandel Carano, a Managing Partner at Oak, and Oak's designee on the
Company's board of directors, commented: "Airspan's WIMAX product
leadership and strong market presence in serving rural broadband carriers
and Smart Grid applications positions the company to benefit from the
recent stimulus initiatives in these two critical communications
infrastructure areas. Airspan has a twelve year track record of serving the
needs of the rural telco's and recent product enhancements have optimized
the products for the utility and energy vertical markets."
Background
Before entering into the Purchase Agreement with Oak, the Company conducted
an extensive and lengthy strategic review process overseen by a special
committee of independent directors, which retained Stephens Inc. as its
financial advisor in February 2009 to assist with the process. While
extensive negotiations were undertaken with several parties, no agreements
could be reached on terms acceptable to the Special Committee. Following
the termination of discussions with one such party on August 10, 2009, Oak
made the offer which, following approximately three weeks of negotiations
between the parties, resulted in the execution and delivery of the Purchase
Agreement on September 1, 2009.
The sale to Oak eases the Company's cash flow and financing uncertainties
that have limited its strategic options. Without the new investment, the
Company would deplete its cash resources in the fourth quarter of 2009.
Oak is currently the sole registered holder of the Company's Series B
Preferred Stock, which was issued to Oak in September 2006 in exchange for
cash and all outstanding shares of the Company Series A Preferred Stock.
The Series B Preferred Stock has approximately 22.6% of Airspan's
outstanding voting power and is convertible into common stock at $2.69 per
share. Following the Series C Preferred Stock sale, Oak will hold a
controlling interest in the Company and will have the right to designate a
majority of its board of directors.
The Series C Preferred Stock
Each share of Series C Preferred Stock will initially be convertible into
100 shares (approximately 6.67 shares after giving effect to the 1-for-15
reverse split described below) of the Company's common stock, entitled to
100 votes (approximately 6.67 votes post reverse split) on all matters
submitted to a vote of the holders of the Company's common stock, entitled
to participate in dividends declared with respect to the common stock as if
converted, and entitled to a liquidation preference equal to $8.00 per
share upon the occurrence of certain events and thereafter to certain
participation rights with the common stock. The Company's Series B
Preferred Stock has similar terms but with a higher conversion price ($2.69
per share) and liquidation preference ($290.00 per share) and no
participation rights.
In addition, as long as Oak holds a majority of the Series C Preferred
Stock and the number of shares into which the then outstanding shares of
Series B Preferred Stock and Series C Preferred Stock would then be
convertible represents at least 25% of the total issued and outstanding
shares of Common Stock of the Company, Oak will be entitled to appoint
three members of the Company's Board.
The Purchase Agreement with Oak provides that the Series B Preferred Stock
will be amended (the "Series B Amendment') subject to approval by the
Company's shareholders, to provide for a 10% carveout for common
stockholders from liquidation preference. The carveout will provide that
upon a liquidation of the Company (as defined in the Articles of
Incorporation of the Company), an amount equal to 10% of the aggregate net
proceeds of such liquidation up to $85.25 million will be payable to
holders of common stock. This is in addition to the right of the common
stock to participate in any sale price in excess of the amount sufficient
to retire the Series B and Series C Preferred Stock. Oak has agreed to
vote its Series B Preferred Stock in favor of the Series B Amendment. In
addition, 10% of such net proceeds would be available for payment under a
new management incentive compensation plan. The Purchase Agreement also
contemplates a new stock option plan covering approximately 15% of the post
transaction equity capitalization after deduction of any options remaining
outstanding.
The closing of the transaction is subject to a number of material
conditions, including there being no material adverse change in the
Company's condition, business, properties or results of operations, and
other customary conditions. While a pre-closing shareholder vote is not
required to approve the issuance of the Series C Preferred Stock under
Washington law, the Company intends to call a meeting of its shareholders
in early October 2009 for the purpose of seeking an advisory vote of
shareholders with respect to the Series C transaction. The Company will
also seek the approval of shareholders for the amendment to the Series B
Preferred Stock to give common stockholders the benefit of the 10% carveout
in the terms of the Series B Preferred Stock. The Company will be seeking
approval of the transactions contemplated by the Purchase Agreement by
holders of a majority of the Company's voting power (including the Series B
Preferred Stock held by Oak) but reserves the right to complete the Series
C transaction with a lesser vote.
The Purchase Agreement may be terminated by the Company and Oak at any time
by mutual agreement. The Purchase Agreement may also be terminated (i) by
the Company in the event a majority of the Company's shareholders
affirmatively reject the advisory vote on the Series C Preferred Stock
investment or (ii) by either the Company or Oak if the closing does not
occur on or before December 31, 2009. The Purchase Agreement may also be
terminated by Oak if, among other things, the Company breaches certain of
its covenants under the Agreement or suffers a material adverse change.
Oak will receive customary registration rights in connection with the
transaction.
Reverse Split
Airspan also today announced that its board of directors has authorized a
1-for-15 reverse split of its common stock. The reverse split was
authorized by Airspan stockholders at a Special Meeting of Stockholders on
December 16, 2008 up to a 1-for-15 share limit. The reverse split will be
effective on receipt of notification from FINRA, which is currently
expected to be received in mid September 2009 (and which is also expected
to be after the record date for the shareholder votes with respect to the
transactions contemplated by the Series C Preferred Stock Purchase
Agreement).
The 1-for-15 reverse stock split will convert 15 shares of the Company's
common stock into one share of common stock. The reverse stock split
affects all issued and outstanding shares of the Company's common stock
immediately prior to the effectiveness of the reverse stock split. The same
1-for-15 reverse stock split ratio will be used to effect the reverse split
of the Company's shares reserved for issuance under its employee stock
purchase and stock option plans and shares reserved for issuance on
conversion of the Series B Preferred Stock. Letters of transmittal are
expected to be sent to stockholders shortly after the reverse split becomes
effective.
The number of shares of Airspan common stock issued and outstanding will be
reduced from approximately 59,814,232 shares, to approximately 3,987,615
shares post-split, without accounting for fractional shares. Airspan will
not issue any fractional shares of its common stock as a result of the
reverse stock split. Instead, it will pay an amount equal to $.08 per
whole pre-split share in cash to registered holders of fractional shares.
The Company's authorized common shares will remain at 100 million shares
and the par value will remain unchanged. As a result, following the
reverse stock split, there will be sufficient authorized shares to be
reserved for issuance upon conversion of the Series C Preferred Stock.
Airspan has retained American Stock Transfer & Trust Company ("AST"), its
transfer agent, to act as exchange agent for the reverse stock split. AST
will manage the exchange of old, pre-reverse stock split shares for new
post-reverse stock split shares. Stockholders of record as of the effective
time will receive a letter of transmittal providing instructions for the
exchange of their shares. Stockholders who hold their shares in "street
name" will be contacted by their banks or brokers with any instructions.
Please read the Proxy Statement for the Special Meeting of Shareholders
when it is available because it contains important information. The Proxy
Statement will be available without charge on the Company's website,
www.Airspan.com, by writing to Airspan Networks Inc., 777 Yamato Road -
Suite 310, Boca Raton, Florida 33431, Attention: Secretary, or through the
Pink Quote System's OTC Disclosure and News Services at www.pinksheets.com.
About Airspan Networks Inc.
Airspan is a leading WiMAX pure player and the solution-provider of choice
for some of the world's largest WiMAX deployments. Developing leading-edge
technology for broadband access and IP telephony, Airspan continues to
supply operators around the world with best-of-breed solutions. With
direct sales offices throughout Asia, EMEA and the Americas, a worldwide
network of resellers and agents, and partnership alliances with major OEMs,
Airspan boasts over 100 commercial WiMAX deployments worldwide.
www.airspan.com.
This press release contains forward-looking statements. All statements,
other than statements of historical facts, including statements regarding
our strategy, future operations, financial position, future revenues,
projected costs, prospects, plans and objectives of management, may be
deemed to be forward-looking statements. The words "anticipates,"
"believes," "estimates," "expects," "intends," "may," "plans," "projects,"
"will," "would" and similar expressions or negative variations thereof are
intended to identify forward-looking statements, although not all
forward-looking statements contain these identifying words. We may not
actually achieve the plans, intentions or expectations disclosed in our
forward-looking statements and you should not place undue reliance on our
forward-looking statements. There are a number of important factors that
could cause actual results or events to differ materially from the plans,
intentions and expectations disclosed in the
forward-looking statements we make. Investors and others are therefore
cautioned that a variety of factors, including certain risks, may affect
our business and cause actual results to differ materially from those set
forth in the forward-looking statements. The Company is subject to, among
other things, the risks and uncertainties described in its Annual Report on
Form 10-K for the year ended December 31, 2008, filed today with the
Securities and Exchange Commission. You should read those factors as being
applicable to all related forward-looking statements wherever they appear
in this press release. We do not assume any obligation to update any
forward-looking statements.
About Oak Investment Partners
Oak and its affiliated funds (collectively, "Oak Investment Partners") are
a multi-stage venture capital firm. The primary investment focus is on high
growth opportunities in communications, information technology, internet,
new media, financial services, information technology, healthcare services
and consumer retail. Over a 31-year history, Oak Investment Partners has
achieved a strong track record as a stage-independent investor funding more
than 481 companies at key points in their lifecycle. Oak Investment
Partners has been involved in the formation of companies, funded spinouts
of operating divisions and technology assets, and provided growth equity to
mid- and late-stage private businesses and to public companies through PIPE
investments. Oak Investment Partners has helped innovators exploit new
business opportunities and anticipate trends through long-term
relationships that endure the changing economic landscape.
Contact Information: For Investor Relations and Media Inquiries, contact: David Brant Senior Vice President & Chief Financial Officer Airspan Networks Inc. Tel: +1 561 893-8650 Fax: +1 561 893-8681 Email: dbrant@airspan.com Charlotte Laurent-Ottomane Investor Relations Tel: +1 561 395 4581 Email: clottomane@airspan.com