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Leap Wireless Said Near Deal to Name Pentwater Nominees to Board

Leap Wireless International Inc., the pay-as-you-go wireless operator, is near an agreement to name two nominees from Pentwater Capital Management LP to its board, according to a person familiar with the situation.

The Pentwater nominees would expand the board to nine directors, said the person, who couldn’t be identified because the agreement isn’t yet public. The nominees are Robert E. Switz and Richard R. Roscitt, telecommunications-industry veterans, said the person. The agreement could be announced as early as today, said the person.

A board presence for Pentwater, which held 4.8 percent of Leap’s stock at the end of March, may boost the odds that the San Diego-based company is sold. When Pentwater nominated three directors for the board in March, the Chicago-based investment manager criticized Leap for poor strategic decisions, including not merging with MetroPCS Communications Inc. in 2007.

Leap shares have dropped 65 percent in the past three years, giving the company a market value of $1.14 billion. Pentwater Chief Executive Officer Matthew C. Halbower, who had also been nominated to join Leap’s board, won’t become a director, the person said.

In recent weeks, Leap and Pentwater have urged shareholders to vote for their respective slate of directors.

“Pentwater’s track record reveals its opportunistic short-term focus and in Leap’s view Pentwater has no interest in providing value to other stockholders,” Leap wrote in a securities filing yesterday.

“Many of the claims that Leap is making are false and are designed to entrench Mark Rachesky’s control of Leap Wireless,” Pentwater wrote in a letter to shareholders yesterday, referring to Leap Chairman Mark Rachesky.

History of Talks

Greg Lund, a Leap spokesman, declined to comment on a possible agreement with Pentwater.

After MetroPCS proposed a merger with Leap in 2007, the two sides abandoned talks because they couldn’t agree on price. Leap also hired financial advisers last year to examine strategic options, including with MetroPCS, and again decided to remain independent, according to Leap’s financial filing.

Leap fell 27 cents, or 1.8 percent, to $14.48 in Nasdaq Stock Market trading yesterday. The stock has gained 18 percent this year before today.

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