Airspan files for Chapter 11 bankruptcy protection

July 2024 | DEALFRONT | BANKRUPTCY & RESTRUCTURING

Financier Worldwide Magazine

July 2024 Issue

Airspan Networks filed for Chapter 11 bankruptcy protection in early April, highlighting the delicate situation across the open radio access network (RAN) market at present.

In a filing at the Delaware bankruptcy court, the company, which specialises in developing 5G hardware and software, said it plans to trade its more than $205m in funded debt for equity and raise up to $95m in new equity financing and will eliminate its existing funded debt. Airspan expects to operate without disruption, and will safeguard its commitment to employees, customers and suppliers throughout the bankruptcy process. Airspan’s Chapter 11 filing has the support of 97.4 percent of its funded debt creditors.

Airspan also noted that it had reached an agreement with most of its creditors to become a private company again through the Chapter 11 bankruptcy process. The company provides open RAN solutions including 4G and 5G indoor and outdoor products, as well as point-to-point fixed wireless offerings.

“This support agreement is the culmination of a strategic review process, and we believe it is the best path forward for Airspan to continue providing exceptional services and products to our customers worldwide,” said Glenn Laxdal, president and chief executive of Airspan. “By strengthening the Company financially with new capital and a debt-free balance sheet, we will be better positioned to execute our plan to capitalize on the significant growth opportunities across our public and private network markets. We appreciate the support and engagement of all of our stakeholders as we build Airspan for the future.”

According to its Chapter 11 filings, Airspan’s funded debt consists of $146.9m in senior notes, a $46.4m term loan and an $11.8m convertible note.

Under the deal, Airspan has received $53m in debtor-in-possession (DIP) from Fortress affiliates, which, combined with its cash on hand, is expected to “provide sufficient capital during the restructuring process to support Airspan’s operations”. The DIP financing is subject to court approval and the satisfaction of specified closing conditions.

“Airspan provides a critical, next-generation suite of solutions for the broader telecommunications industry and possesses an invaluable intellectual property portfolio to protect its innovations,” said Drew McKnight, co-chief executive officer and managing partner at Fortress. “We are excited about the Company’s long-term growth opportunities. Our significant commitments through this Agreement reflect our conviction that a recapitalized Airspan can further solidify its leadership position within the wireless industry. We look forward to continuing to support the Company’s talented management team throughout this process and in the future.”

Airspan was originally a product division of DSC Communications but was separated from the main business in the late 1990s. Since going public in 2021 the company has struggled, cutting its workforce from 800 to around 370. The company was listed on the NYSE in 2021 after a special purpose acquisition company (SPAC) merger with New Beginnings Acquisition Corp. In March 2023, the company sold its telecoms equipment maker Mimosa Networks to Radisys Corp, a unit of Jio Platforms, for $60m, amid ongoing balance sheet difficulties. May 2023 saw Airspan boost its coffers by $25m, by renegotiating the terms of its credit agreement with Fortress. That deal also brought about a change in leadership, with Mr Laxdal – who at that point was serving as chief operating officer – replacing Eric Stonestrom as chief executive.

In the three months to 30 September 2023, the company’s revenue slumped to $14.3m, down from $32.1m in the prior quarter, and $41.1m a year earlier.

Airspan went public in a so-called de-SPAC transaction in 2021, but the $115.5m the transaction raised was insufficient for the company’s research and development needs. As a result, it had to take on an additional $50m in debt.

Airspan is not alone in its financial difficulties. Indeed, the wider telecoms market has struggled of late. According to Dell’Oro, in 2023 the market for telecoms equipment declined for the first time since 2017, due to lower 5G and home broadband investments, particularly in North America.

As major macro 5G buildout winds down, companies of all sizes are experiencing financial difficulty, particularly in the RAN market, where operators are lowering their capital expenditures. Meanwhile, US operators also are taking a lot longer to move from non-standalone 5G to standalone 5G and network slicing than many expected.

Richard Summerfield