Cable Firm That Quit O.C. Opens Phoenix Office

IRVINE â€”  American Wireless Systems Inc., which closed its office here last month and laid off 100 people, has opened an office in Phoenix and has about 30 employees there, the company confirmed Friday.

Jeffrey D. Howes, president of the controversial company that is seeking to build so-called wireless cable-TV networks, said the firm has a research office in the Arizona city.

Howes said that the company has also signed a tentative agreement to go public through a reverse acquisition. In such a transaction, a private company merges with a public company as a way to raise money by selling stock to the public.

American Wireless agreed last month to acquire Short Takes Inc., a company based in Eden Prairie, Minn., in a deal that gives American Wireless about $6 million in capital, Howes said. Short Takes developed a videotape system but shut down its operations in May.

If the merger goes through, American Wireless would get about 80% of the outstanding common shares of Short Takes. The company plans to use the money to finish building its wireless cable-TV systems. Such systems offer competition to standard cable television by broadcasting pay-TV channels by microwave radio.

The deal also relieves American Wireless’ headaches caused by regulators. As a private firm, American Wireless raised capital by selling general partnerships to investors who bought stakes in the systems proposed in markets in Fort Worth, Minneapolis and Pittsburgh. The company brought in more than $23 million from about 1,500 partners in the three markets.

Earlier this year, regulators in half a dozen states issued cease-and-desist orders against the company or launched investigations into whether it was selling unlicensed securities.

American Wireless contended it was operating general partnerships, which are not regulated under securities law. Such partnerships require that partners be involved in day-to-day management of a company.

Regulators alleged that the general partners did not, in fact, run the company, making it a limited partnership subject to regulations that require all investors be told of potential business risks.

American Wireless said it actively solicited the advice of its general partners in running the business and adequately informed them of all business risks.

Howes said that by going public the company will no longer be selling general partnerships. Hence, it will stop battling state securities regulators in court, and it no longer needs the large sales and marketing staff it had established in Irvine to find investors in the partnerships.

“We felt strongly about the legal issue, but it’s not an issue anymore,� he said.

He said the firm will keep its general partners in Fort Worth, Pittsburgh and Minneapolis, where American Wireless itself owned 25% shares in the separate general partnerships. Those shares will now be publicly owned, he said.

“It’s always been our goal to be public,� Howes said. “We raised money through general partnerships because we didn’t have access to public capital.�

Howes said that two principal owners of American Wireless--Dexter Cohen and Kevin King--chose not to move. He said the two men agreed on Friday to part from the company within 10 months.