Lightsquared has reportedly reached a restructuring plan that would give a 60% stake in the US satellite/terrestrial venture to its largest debt holder Charlie Ergen, chairman of DTH giant Dish Network.
Ergen would provide US$1bn of a new US$2.2bn…
Lightsquared has reportedly reached a restructuring plan that would give a 60% stake in the US satellite/terrestrial venture to its largest debt holder Charlie Ergen, chairman of DTH giant Dish Network.
Ergen would provide US$1bn of a new US$2.2bn junior loan under the deal while JP Morgan, another LightSquared lender, would provide US$189m in funding in exchange for a 31.9% stake, according to court reports.
The plan, which would keep LightSquared intact, would also see the venture raise US$750m-US$1bn in fresh capital.
It reportedly has the support of all LightSquared parties apart from its current majority equity owner Harbinger Capital Partners, which had earlier tried to break up the venture to maintain a chunk of its assets.
However, the deal still needs to be memorialised in the form of a Chapter 11 plan and gain the approval of Judge Shelley Chapman, who was cited telling a hearing yesterday that it may not be confirmable as the sides could still continue with mediation.
Chapman had earlier directed the various parties to find a broad consensus through mediation, raising the prospect of converting the case to a Chapter 7 liquidation if they could not reach a deal.
LightSquared has been in voluntary Chapter 11 bankruptcy since May 2012, and has already been through several unsuccessful restructuring proposals.
Harbinger’s earlier proposal, hatched in August with JP Morgan and another lender Mast Capital, would have split the group up and handed some of its spectrum to creditors, but this was effectively rejected in October.
The latest plan would see JP Morgan set aside US$189m in an escrow account to satisfy Harbinger’s claims, reported the Wall Street Journal.
LightSquared filed for voluntary reorganisation after its spectrum was found to interfere with GPS technology. The company is still talking with regulators for a way around this issue.
