Straight Path Communications Inc. announced it has secured $17.5 million in new debt financing, expanding the company’s options as it continues to explore strategic alternatives for the company.
Last month, the Federal Communications Commission’s Enforcement Bureau announced a settlement valued in excess of $100 million with the company to resolve an investigation of Straight Path’s failure to deploy wireless services as required under its FCC spectrum licenses.
The all-new funding comes from a syndicate of investors, led by affiliates of long-term shareholder Clutterbuck Capital Management LLC. The loan is senior secured and the lenders have initially received approximately 252,000 warrants with a strike price at $34.70, as part of the financing package.
Kerrisdale Capital, a private investment company, a short seller, said that Straight Path, a $500 million company, is worth 70% less than its current market cap given the low value of its portfolio of millimeter-wave spectrum and the abundance of competing spectrum.
“We are highly encouraged by Straight Path’s recent FCC settlement and its unique position as the most significant holder of newly regulated, commercially available 5G spectrum. We are glad to help finance the company at this critical juncture, and we look forward to seeing the positive developments continue,” said Robert Clutterbuck, Managing Partner at Clutterbuck Capital Management LLC.
“This investment is timely and enables us to move quickly to explore the exciting opportunities in the rapidly expanding 5G sphere and broader wireless industry,” said Straight Path Communications CEO Davidi Jonas. “Our obligations over the next 9 months to the FCC are covered, and we can now turn our focus to exploring strategic alternatives for the company in order to maximize shareholder value.”