Philip Falcone, head of the Harbinger Capital Partners hedge fund, has joined troubled US satellite/terrestrial venture LightSquared’s board, as Sanjiv Ahuja steps down as its CEO.
Ahuja will continue to serve as LightSquared’s chairman, but details…
Philip Falcone, head of the Harbinger Capital Partners hedge fund, has joined troubled US satellite/terrestrial venture LightSquared’s board, as Sanjiv Ahuja steps down as its CEO.
Ahuja will continue to serve as LightSquared’s chairman, but details of the new role for Falcone, whose hedge fund financially backs the venture, were not disclosed.
LightSquared did announce that current CFO Marc Montagner, who only joined the company in January, and chief network officer Doug Smith will act as co-COOs as the group searches for a new CEO.
Ahuja’s sudden departure comes after the FCC ruled against LightSquared from launching commercial services, following an official report that found “no practical way” to mitigate the GPS interference issues that affects its L-band spectrum. This ruling has placed the venture into significant uncertainty, as the delay to launch commercially in any form weighs down on its financial resources.
However, in announcing the departure of its CEO, the company said it was “taking an aggressive approach to its finances to ensure that it has adequate financial runway while it works through these issues”.
LightSquared was unable to elaborate on what these measures were, although the group has repeatedly insisted it has enough cash to last several quarters, even as reports suggest it is axing nearly 50% of its 330-strong workforce while hiring Moelis & Co for restructuring advice.
Harbinger itself is also coming under increasing pressure. Reports citing a law suit, which was filed in a New York court in early February by some of its investors, reveal criticisms towards Falcone for not properly disclosing intentions to invest heavily in LightSquared in the first place.
Separately, it is understood that Harbinger has hired Kirkland & Ellis LLP and Latham & Watkins LLP for legal advice on how to proceed following the FCC ruling that prevents it from launching commercially.
Announcing his resignation on 28 February, Ahuja said: “During my tenure at LightSquared, we all worked tirelessly to create the nation’s first open wireless broadband network and provide consumers with a new wireless broadband experience. That work continues and I wish the company and its fine management team well as they work to achieve this important goal.”
Industry observers have speculated that LightSquared could now seek to trade spectrum with the US government, or embark on a litigation spree. Falcone did not shed any light on what his next step could be in a statement that joined Ahuja’s announcement. He did, however, stress that the group remained “committed to working with the appropriate entities to find a solution to the recent regulatory issues. We, of course, agree that it is critical to ensure that national security, aviation and the GPS communities are protected. I am confident that working together, we can solve this problem and bring the American consumer the lower priced 4G wireless alternative they need and deserve.”
In another high profile departure to be announced this week, Michael Targoff, CEO of Loral Space & Communications, revealed in an SEC filing that he had stepped down from the board of local satellite operator ViaSat on 24 February.
Targoff had been a member of ViaSat’s board since 2003, but his role became untenable after the operator decided to proceed with legal action against Loral’s satellite manufacturing subsidiary Space Systems Loral over an intellectual property dispute.
ViaSat announced on 21 February that talks to avert court action over allegations that SS/L infringed patents and breached non-disclosure obligations had been unsuccessful. SS/L denies the allegations.
