US satellite/terrestrial 4G-LTE wireless broadband venture LightSquared has secured a US$850m four-year loan.
SatelliteFinance understands that the facility, which was arranged by UBS, carries an interest of 12% and is noncallable in the first year. A…
US satellite/terrestrial 4G-LTE wireless broadband venture LightSquared has secured a US$850m four-year loan.
SatelliteFinance understands that the facility, which was arranged by UBS, carries an interest of 12% and is noncallable in the first year. A spokesman for the venture declined to comment on the rate or the size of the banking syndicate,but said that the loan was oversubscribed.
He added that LightSquared has already signed up two undisclosed customers, and was in “pretty advanced” negotiations with 11 more partners.
“LightSquared is confident that the value of the business is increasing and will continue to increase as the company continues to meet operation milestones faster than anticipated,” he said.
“We will continue to evaluate our funding needs as we continue to develop and grow our business.”
With this additional US$850m, LightSquared, which is backed by US hedge fund Harbinger Capital Partners, has now racked up more than US$2bn in equity and debt proceeds and in commitments.
UBS and BoA Merrill Lynch have been advising LightSquared on its financing options, while legal advice has been provided by Milbank, Tweed, Hadley & McCloy, Weil, Gotshal & Manges and Goldberg, Godles, Wiener & Wright. Altman Vilandrie & Company, the boutique management consulting group, has also provided advice.
SK Telecom preparing major investment
Light Squared is also preparing for another major wave of financing, this time from South Korean telecoms operator SK Telecom, which is on the verge of making a significant investment in the venture.
A spokesperson for the Korean telco confirmed to SatelliteFinance that the two companies are currently holding discussions over SK becoming a shareholder, although the precise amount and terms of any deal have yet to be finalised.
A source close to LightSquared also told SatelliteFinance that a deal between the two companies was already in the pipeline.
The investment is, however, likely to be far higher than the US$100m that has been mooted by a number of media reports. On May 26, 2010, SK Telecom’s board of directors conditionally approved an investment of up to US$1bn in Harbinger Global Wireless, which along with SkyTerra became LightSquared.
If the transaction is successful, it would mark the first return to the US market for SK since it exited the country following the sale of its unprofitable US mobile joint venture Helio to Virgin Mobile USA in June 2008.
In spite of the failure of Helio, SK continues to follow a policy of international expansion, particularly given the relatively stagnant growth in its domestic market, where it and KT Corp dominate. Indeed, in order to counter KT Corp’s increasing competitive threat, SK announced in 2009 that it would construct its own nationwide LTE network that will be commercially launched in 2013.
LightSquared accelerates spectrum leasing
The strong early demand for capacity on LightSquared’s 4G-LTE-wholesale network has prompted the group to bring forward a spectrum access agreement with UK satellite firm Inmarsat to the fourth quarter of this year.
LightSquared had until January 1, 2013, to initiate the agreement, which will see Inmarsat lease the venture some of its spectrum at a cost of US$115m per year. The process is expected to take 30 months following the exercise of the option, and the first payment will be due upon the formal delivery of notice.
This forms the second phase of a cooperation agreement that was originally arranged in December 2007 between Inmarsat and SkyTerra, which became LightSquared after being acquired by Harbinger earlier this year.
Sanjiv Ahuja, chairman and CEO of LightSquared, said: “By accelerating Phase 2 of the Inmarsat Cooperation Agreement, we will be able to utilise and deploy additional spectrum earlier than anticipated, further enhancing the capacity of LightSquared’s 4G-LTE-wholesale network.” Phase 1 was triggered on August 18, enabling LightSquared to pay Inmarsat US$337.5m over the next 18 months to reband L-band spectrum covering North America, increasing the contiguous L-band spectrum of both parties.
This spectrum had become fragmented over time because its allocation relied on multilateral agreements working on a ‘first come, first served’ basis.
