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Quadrangle Group Nails First Deal –

In its first transaction ever Quadrangle Group LLC affiliate Access Spectrum LLC this month concluded its bid in the Guard Band Spectrum conducted by the Federal Communications Commission. The company was organized as a 700 MHz Guard Band Manager.

Access Spectrum’s gross bid of approximately $92.1 million made it the winning bidder for FCC licenses in 19 markets across the U.S., including Los Angeles, Atlanta, Denver, Dallas, New Orleans, Minneapolis/St. Paul, St. Louis, Kansas City, Houston, San Antonio, Oklahoma City, Charlotte, Memphis, El Paso/Albuquerque and Salt Lake City.

The Guard Band Spectrum is a medium through which industrial companies communicate with each other. “This is similar to the way Federal Express uses its two-way radio exchange with their employees on a local basis or the way the Taxi and Limousine Commission communicate with its cars either through voice or data transmission,” said a source close to the firm.

The source also said the auction came about after a number of parties including Motorola and the Industrial Telecommunications Association (ITA) lobbied the FCC to auction off the Guard Band Spectrum. “After years of lobbying, they were successful in getting the FCC to auction off the spectrum with some key provisions included with the most important being that the spectrum cannot be used for cellular infrastructure. So it really can only be used for industrial usage.”

Industry sources noted that there are thousands of industrial users who need access to this type of spectrum because of the enormous capacity constraints.

The Quadrangle Group was made aware of the transaction through its longstanding relationship with the FCC Council, which was working with the ITA to put together a bidding group for the spectrum. “The Quadrangle Group was introduced to the ITA in its second week of existence and it was a perfect fit for the firm because of the firm’s interest in the space,” said the source. “[And] they’ve been working with the ITA and Motorola as partners on this deal [since then].”

In the end Access Spectrum won out in the auction which featured Pegasus and Nextel. The two companies will each receive a complimentary group of licenses. Because of its standing with the FCC as a Designated Entity, Access Spectrum received a 25% bidding discount, reducing its net bid to approximately $69.1 million. The FCC has begun reviewing the legal qualifications of the winning bidders whereupon it will issue licenses to later in the next three to six months.

“When we ultimately get the spectrum solved we will then have the right to license it out to any industrial users,” said the source. “There is no infrastructure requirement on our part. The Motorolas and the Ericssons of the world will manufacture equipment for the use of the spectrum and all we do is collect the spectrum license fee and manage the collection of data as to who’s got which slice of spectrum, on which antenna site and in which area.”

“This transaction is gratifying in that it really points out what we expect to be doing at Quadrangle,” said the source. “It’s right in the middle of our space in the wireless telecom area, which we think is a high growth and exciting area.”

Quadrangle Group was founded in March and invests primarily in the media and communications industries.