Nextel Communications Inc has found the sugar-daddy it so sorely needed since its MCI Communications Corp alliance fell through, and Craig McCaw has found a home for a large part of AT&T Corp’s cash he and his family collected from the sale of McCaw Cellular Communications Inc. McCaw and family have agreed to invest up to $1,100m over the next six years in the Rutherford, New Jersey company that is in process of upgrading Specialised Mobile Radio systems around the US into a US-wide mobile telephone system. Not all the cash will go to Nextel: Motorola Inc has rather more of Nextel’s shares than it wanted – taken when it sold installed mobile radio systems to Nextel, and some of the McCaw purchases will be from Motorola. McCaw says he wants to enhance the radio despatch systems rather than attempting to copy cellular, Personal Communications Systems or paging services – I have been there, done that and it is not my intent to do what I’ve already done, he said. We will mine for gold in the new field of wireless communications for workgroups, and by emphasizing despatch, messaging, and data in combination with telephone interconnect, Nextel can enhance the quality of life for mobile work teams. As supplier to Nextel, Motorola will rename its MIRS technology iDEN, or Integrated Dispatch Enhanced Network, and license essential intellectual property rights to other qualified manufacturers. It will also make several technology improvements to enhance reliability and audio quality under a revised supply agreement. McCaw will become a member of the Nextel board with control over a newly created operations committee, and his family will immediately buy $14.9m of new Nextel shares at $12.25 per share and 4m Nextel shares from Motorola for $49m. On closing of the $14.9m share purchase, McCaw will buy 8.16m preferred units of Nextel shares, each convertible into three common shares, for $300m, and will be granted options on up to 15m new shares within two years of closing at $15.50 per share, up to 15m shares within four years at $18.50 per share, and up to 5.0m within six years at $21.50 per share, each option subject to exercise of the previous one. Motorola has also granted McCaw options on 9m shares over the next six years at exercise prices and dates identical to those for the Nextel options, as well as a right of first refusal on its existing Nextel shares. Nextel’s shares rose $3 to $16.25 in early trading yesterday.
