Leading the investor group, software giant Microsoft and private equity firm Hicks Muse Tate & Furst each will invest $200 million in Teligent convertible stock. Other investors Chase Capital Partners, DB Capital Partners, and Olympus Partners backed the firm with a combined stake of $100 million.
Microsoft's investments in broadband companies and the telecommunications industry represent its desire to promote high-speed Net access. The move is meant to spur more people to purchase and use Microsoft set-top box and multimedia technologies, which demand more bandwidth than traditional telephone lines provide.
In recent months, Microsoft took a $5 billion stake in phone giant AT&T to gain access to 2.5 million to 5 million cable set-top boxes that Ma Bell plans to deploy. The software giant also invested $600 million in wireless player Nextel and will develop a wireless portal for the firm's 3.15 million phone customers.
At closing, the investment group will own approximately 14 percent of Vienna, Virginia-based Teligent's outstanding common stock. Hicks Muse will nominate its chief executive officer, Tom Hicks, to become a member of Teligent's board of directors, the companies said.
The conversion price of 57.5 per share is 28 percent more than the previous five-day average closing price on the date the agreement was reached, according to the companies.
Broadband Internet access lets users receive data at speeds 5 to 50 times the pace of the fastest dial-up modems, which run at a maximum of 56 kilobits per second. At broadband speeds, video and audio can be sent at near-broadcast quality.