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Sunday, May 28, 2023

Riding the Wireless Wave Costs Doug Manchester Millions

Thanks to the stock market crash last year, everyone’s portfolio took a big hit, but some took bigger hits than others.

Doug Manchester, a local hotelier and developer, incurred a loss of millions of dollars when he sold off nearly all of his 14 percent stake in NextWave Wireless, a San Diego public company that owns wireless spectrum and provides broadband services, and is teetering on the verge of its second bankruptcy.

Manchester, a founding director of the company, sold more than 10 million shares Dec. 11 at 6 cents a share, netting him $602,560, according to a federal securities filing.

NextWave shares were trading above $12 in early 2007. The stock’s 52-week range as of Jan. 5 was 7 cents to $7.59.

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In August 2007, Manchester made a series of purchases of about 800,000 NextWave shares at prices ranging from $6.23 to $7 per share, averaging $6.83 per share. Using that price, he spent about $5.5 million.

NextWave, which was founded in 1996 and emerged from bankruptcy in 2005, has been in tough straits for much of the past year, as it attempts to raise capital to keep its operations alive.

Last month, it sold 75 percent of its infrastructure business, IP Wireless, to a group of IPW’s management team for $1 million plus expenses related to the sale up to $500,000. That’s a huge discount from the $100 million in cash and stock that NextWave paid for IPW in 2007.

NextWave said in November that it was taking a number of actions, including selling IPW, discontinuing operations in two other subsidiaries, and pursuing liquidation in three subsidiaries in foreign nations, “to meet its estimated working capital requirements at least through September 2009.”

For the nine months ended Sept. 30, NextWave reported revenue of $51.5 million, up 95 percent from $26.4 million for the like period of 2007. Its net loss for the nine months last year was nearly $435 million, compared with a net loss of $229 million for the same period in 2007.

In September, NextWave cut 67 employees from its local work force, bringing the total to 453.

In October, the business said it raised $100 million in financing through issuing secured lien notes to two private equity firms.

Despite all this, the market hasn’t been impressed. From a high of $7.59 in May, the stock, traded on Nasdaq under WAVE, continued losing ground until the latter part of the year, crashing ashore to a mere dribble. As of Jan. 5, shares were going for about a dime.

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CHIC Investor Wants Answers:
Investors in any retail stock are probably none too pleased about the just-passed dismal Christmas season. But Charlotte Russe Holding’s investors have other reasons to be down.

In November, its board passed on a possible sale of the business to a private equity group in a stock deal that would have paid $9 to $9.50 per share, or an aggregate of $188 million to $198.6 million.

One shareholder, Bryant Riley of Riley & Co. of Los Angeles, criticized Charlotte Russe’s board for rejecting the offer in a letter filed with the Securities and Exchange Commission on Dec. 23. Riley said the board should not have spurned the offer, and asked that this and other recent actions the board has taken be addressed in an open letter to shareholders.

“We are deeply troubled by the recent actions taken by directors and members of management, including the corporate governance missteps and the strategic and operational direction of the company,” Riley said in his letter.

In rejecting the bid, Charlotte Russe’s board said it wanted to stick to its turnaround plan and was confident in its new management.

Founded in 1975, Charlotte Russe sells apparel and accessories to females in their teens and early 20s. It was approaching 500 stores and $900 million in sales at the end of fiscal 2008, according to its Web site.

As of Jan. 5, CHIC stock was going for $6.19, which means its market value was about $130 million. Its 52-week range was $3.98 to $20.61.

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Ticker Takes:
Axesstel said Chairman Bryan Min, founder and CEO of Epsilon Systems Solutions, resigned from the board for personal reasons, and will be replaced early this year Solera Holdings said it completed its acquisition of HPI, a subsidiary of British insurance firm Avivva RF Industries declared a regular quarterly cash dividend of 3 cents per share payable Jan. 15 to shareholders of record Dec. 31 Cymer said Chief Financial Officer Nancy Baker resigned and was replaced by interim CFO Paul Bowman Sierra Nevada said it completed its acquisition of SpaceDev, a Poway firm involved in private spaceflight, for $38 million.

Send any news of locally based public companies to Mike Allen via e-mail at mallen@sdbj.com. He can be reached at 858-277-6359.


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