US satellite/terrestrial venture LightSquared is to nearly double the size of its short-term DIP loan to around US$74m after warning it risked running out of cash.
Bankruptcy court judge Shelley Chapman approved the loan to replace an earlier US$33m…
US satellite/terrestrial venture LightSquared is to nearly double the size of its short-term DIP loan to around US$74m after warning it risked running out of cash.
Bankruptcy court judge Shelley Chapman approved the loan to replace an earlier US$33m facility, including the roughly US$1m worth of interest it had racked up. The new debt will run until 15 June and carries a 15% per annum interest rate that is payable in kind.
Court filings show SP Special Opportunities (SPSO), which is controlled by satellite TV mogul Charlie Ergen, once again agreed to provide 53% of the debt.
Investment group Capital Research and Management Company is providing 20.8%. Private equity firm Fortress Investment Group, which has also put forward a bankruptcy reorganisation plan that is backed by Harbinger Equity Partners, LightSquared’s controlling equity owner, has stumped up 10.1%.
Chapman has yet to make a ruling on that plan, which would see roughly US$1bn of loans that SPSO has elsewhere in the venture being repaid in debt rather than cash like other lenders.
She is also yet to rule on legal action from LightSquared that claims SPSO improperly bought the debt in the first place because Ergen is chairman of US DTH giant Dish Network, which is deemed as a competitor because it is also looking to deploy a terrestrial LTE network with satellite spectrum.
Ergen claims his debt trades were personal investments and were not made on behalf of Dish.
Ergen to sue Falcone
Ergen is meanwhile seeking permission to sue Harbinger head Philip Falcone over his handling of the wireless venture’s bankruptcy.
Lawyers for Ergen have accused Falcone of disregarding fiduciary duties as a director of LightSquared, which has been in Chapter 11 protection for nearly two years.
In a court filing, SPSO representatives claimed Falcone was more focused on preserving his own investments, causing the venture to avoid a “potentially value maximising transaction” at every turn.
Falcone indirectly owns around 96% of LightSquared through his controlling interest in Harbinger and affiliated funds.
“The only silver lining is that LightSquared has now accrued a new source of value – claims against Mr Falcone worth potentially hundreds of millions of dollars,” said the Willkie Farr & Gallagher lawyers.
SPSO had backed a US$2.2bn sale to Dish before the satellite broadcaster withdrew its offer in January.
That offer had already been rejected by Harbinger.
LightSquared filed for voluntary reorganisation in May 2012, after spectrum it planned to use for a nationwide LTE network was found to interfere with GPS.
It is still talking to regulators for a way around these spectrum concerns; however, the FCC recently said it was unsure whether it would be able to approve the planned network by the end of 2014.
