US hedge fund Harbinger Capital Partners reportedly plans to issue a new class of shares for US satellite/terrestrial venture LightSquared to encourage more direct investments.
Billionaire manager Philip Falcone wants to make it easier for existing and…
US hedge fund Harbinger Capital Partners reportedly plans to issue a new class of shares for US satellite/terrestrial venture LightSquared to encourage more direct investments.
Billionaire manager Philip Falcone wants to make it easier for existing and prospective investors to manage and make direct investments in the venture, reported Reuters citing an email sent to his fund’s members.
Although LightSquared has raised more than US$2bn in debt and equity over the last seven months, investors are reportedly concerned that Harbinger may find it difficult to honour redemption requests. This is because significant revenues are likely to still be years away, with the group’s terrestrial network far from completion.
Under Falcone’s reported plan, redemption requests could theoretically be met through a combination of cash and interest in the new LightSquared shares.
Harbinger has recently received redemption requests from a number of high-level investors, including Blackstone Group, Goldman Sachs and the New York State Common Retirement Fund, the report adds.
In addition, LightSquared reportedly requires at least another US$5bn to roll out its terrestrial network, which is being built by European vendor Nokia Siemens Networks, and meet an FCC target to cover 238 million people in the US by the end of 2015.
News of the restructuring plan follows LightSquared’s first report to the FCC on the progress it is making to alleviate GPS interference concerns over its planned network.
These concerns were officially raised by the National Telecommunications and Information Administration on 12 January. In response, LightSquared committed up to US$20m to research ways to remove any potential problem.
Updating the FCC on 25 February, the company announced the formation of a “technical working group” in cooperation with the US GPS Industry Council (USGIC).
The two groups will file a report later this month to provide the FCC with details about test plans and procedures. Further updates will follow every month until 15 June 2011.
Harbinger was unable to comment before the press deadline.
