Leap Wireless eliminates staff

Leap Wireless International reduced its staff size by 130 positions and consolidated operating regions.

Leap said it expects to take a one-time charge of $750,000 in the third quarter. The changes are expected to reduce overall costs by $2.2 million for the remainder of the year.

“Our business is built on a model that requires one of the lowest cost structures in the industry and necessitates that prompt action be taken to maintain our cost leadership, especially in today’s economic environment,” Harvey White, Leap chairman and CEO, said in a press statement.

Leap is in desperate need of new funding after defaulting on vendor credit loans last month. Mounting debt, weakening demand, fraud and an unfavorable arbitrator ruling have all contributed to Leap’s default. The company has since turned to UBS Warburg to explore new sources of financing and restructuring of its debt. Some lenders under Leap’s credit facilities have already stopped funding new loan requests, including loan proceeds for interest that had previously been paid through draws under the credit facilities. Leap said last month that it has chosen not to pay interest on the loans.