Wave Division Holdings honcho Steve Weed said he wouldn't take Millennium Digital Media's decision to back out of a deal to sell him its systems lying down.
Now, he's asking a court to either order the sale to happen — or to let his company overbuild the Millennium systems he sought to buy.
According to the suit, first filed in October in King County Superior Court in Washington state and amended to include the overbuild request in late December, Wave thought it had a deal to buy about 70,000 subscribers from Millennium a year ago for $157 million. But Millennium reneged after some debt holders thought they could get a better price for the systems in Washington, Oregon and Michigan, according to the suit.
No court date has been set concerning the lawsuit.
DEAL A YEAR AGO
Wave first began negotiating with Millennium in 2005, according to the suit, reaching a deal on Feb. 8, 2006. But soon after that deal was signed, Wave claims Millennium began dragging its feet, failing to seek immediate approval of the transaction.
The buy was expected to be sort of a homecoming for Weed, who ran the Seattle system for Millennium before striking out on his own in 2002.
Weed declined to discuss details surrounding the suit. “We believe that we had a binding purchase and sale agreement,” he said. “We are pursuing our rights to acquire the system.”
Wave claims the reason behind the delay was that owners of Millennium's high-yield bonds had begun talks with Millennium to either acquire the assets Wave wanted to buy or sell them to a third party.
While the bondholders were not identified in the suit, executives in the cable investment community have said in the past they believed them to be New York hedge fund Trimaran Capital Partners and Stamford, Conn.-based distressed-debt investor Black Diamond Commercial Finance.
After being provided “active assistance” by Millennium, the bondholders then approached Millennium's senior creditors and purchased all or a portion of its senior debt, the suit claims. This elevated the former junk-bond holders to a senior secured creditor position with security interests, liens and encumbrances on the systems, according to Wave.
“The purchase of the senior debt was effectively a sale of the system assets and violated the Asset Purchase and Unit Purchase agreements as it transferred control of the assets to a different entity,” Wave claimed in the suit.
After securing its new position, the junk-bond holders objected to the sale of the assets to Wave, believing they could get a higher price from another party.
The sale agreement was terminated on July, 28, 2006, according to the suit.
Now, according to the suit, the junk bond holders are attempting to gain control of Millennium, proposing a debt-for-equity swap that would effectively be a sale.
In the meantime, Wave notified Millennium of possible plans to build its own broadband networks in the same franchise areas where he tried to buy the incumbent systems.
Millennium has objected to the proposed overbuild, making the somewhat puzzling claim that it violates the original agreement.
According to the suit, Millennium has asserted Wave's obligations under the agreement remain in full force and effect and that Millennium would retain its full legal rights.
Wave has asked the court to either force the sale to go through or to allow it to overbuild Millennium.
Wave also wants unspecified damages and court costs.
Millennium senior vice president of marketing Peter Smith declined comment.