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Motient Announces Private Placement of Common Stock and Repayment of Corporate Debt LINCOLNSHIRE, Ill. --(Business Wire)-- July 2, 2004 -- Motient Corporation (MNCP) announced today that it closed a sale of common stock to several institutional investors in a private placement. The investors purchased 3.5 million shares of Motient's common stock, at a price of $8.57 per share, yielding gross proceeds to the Company of approximately $30.0 million. The closing represented the consummation of an agreement entered into by the Company on June 25, 2004. The per share price represents a 15% discount to the June 24, 2004 closing stock price of $10.09.Under the terms of a registration rights agreement that Motient signed with the investors, Motient agreed to register these shares for resale by the investors by the end of November 2004. Motient also issued to these investors warrants to purchase an additional 525,000 shares of common stock at an exercise price of $8.57 per share. The warrants will vest if and only if Motient fails to meet certain deadlines set forth in the registration rights agreement. Neither the shares sold, the warrants issued in connection with the shares, nor any shares of Motient's common stock that would be issued upon exercise of those warrants, have been registered under the Securities Act of 1933, as amended, and such securities may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. (For additional information about the July 1, 2004 private placement, please see our quarterly report on Form 10-Q for the quarter ended March 31, 2004, filed on July 2, 2004). Motient plans to use the proceeds from the private placement to repay certain existing indebtedness of the Company. The remaining proceeds will be used for general corporate purposes as the Company continues to focus on cutting costs and improving operating efficiencies. In June 2004, Motient used general corporate funds to facilitate negotiated settlements of its vendor financing facility and promissory note with Motorola, and its capital lease with Hewlett-Packard for certain network equipment. The full amount due and owing under these agreements was a combined $6.8 million. Motient agreed to pay a combined $3.9 million in cash and issue a warrant to Motorola to purchase 200,000 shares of our common stock at a price of $8.68 per share, in full satisfaction of the outstanding balances. In the case of Hewlett-Packard, the letter of credit of $1.1 million securing payments under the lease was released and Motient took title to all of the leased equipment and software. In the case of Motorola, there was no equipment or service that Motorola was obligated to provide. According to Christopher Downie, Motient's Executive Vice President and Chief Operating Officer, "We believe that these corporate finance transactions represent positive developments for Motient. The retirement of these debt obligations means that they will no longer encumber our assets, including our investment in MSV, our base stations and our frequencies. We think that the transactions also improve our monthly operating cash flow profile and provide us continued opportunity to drive down costs and maximize operating efficiencies." About Motient Corporation: Motient Corporation owns and operates one of the nation's largest two-way wireless data networks. Motient provides a wide range of mobile and wireless Internet services principally to business to business customers and enterprises. The company is a leader in providing BlackBerry(TM) services on its network as well as on the third generation networks of Verizon Wireless and T-Mobile. Motient also provides wireless solutions to the mobile professional, transportation, field service and telemetry markets. http://www.motient.com. Statement under the Private Securities Litigation Reform Act: With the exception of any historical information contained in this release, the matters described herein contain forward-looking statements that involve risk and uncertainties that may individually or mutually impact the matters herein described, which could cause actual results or revenues to differ materially from those contemplated by these statements. |
