US satellite/terrestrial venture LightSquared looks set to be granted permission for increasing its debtor-in-possession loan to as much as US$51.4m.
Judge Shelley Chapman, who is overseeing LightSquared’s bankruptcy, was cited yesterday saying she…
US satellite/terrestrial venture LightSquared looks set to be granted permission for increasing its debtor-in-possession loan to as much as US$51.4m.
Judge Shelley Chapman, who is overseeing LightSquared’s bankruptcy, was cited yesterday saying she was prepared to approve the new agreement after she properly reviewed the changes.
Original plans filed in June for the DIP loan, which will be provided by US Bank, totalled just US$40m.
Matthew Barr, a Milbank lawyer acting on behalf of LightSquared, reportedly told the US Bankruptcy Court in Manhattan that the new deal will enable the venture to borrow US$30.6m immediately. Of this amount, around US$23m will go towards lease payments, with the rest used for general corporate purposes, including bankruptcy costs.
The next US$10.8m is earmarked for use early next year, Barr reportedly added, helping to fund operations until November 2013. As with the original DIP proposal, the final US$10m of the facility can only be released with the lenders’ discretion.
US Bank represents a group of lenders holding around US$320m of LightSquared’s debt.
Another group of lenders, which represents around US$1bn of its debt, reportedly do not object to the new loan, but warn it could trigger a default that would stop the company from paying legal and other administrative costs.
LightSquared listed US$4.48bn in assets and US$2.29bn in liabilities in its initial bankruptcy filing back in May. The company has said it is using the Chapter 11 process to keep creditors at bay, while it tackles the regulatory obstacles that are currently prohibiting the launch of its nationwide 4G wireless network.
The FCC is currently prohibiting the venture from launching commercial services because its spectrum interferes with GPS technology.
On 17 July, Judge Chapman approved LightSquared’s use of Latham & Watkins LLP to work on matters including its pursuit in getting the FCC to approve the use of its spectrum.
Alvarez & Marsal is financially advising LightSquared.
