LightSquared has been cleared to take an extra loan from a group that includes a fund linked to Charlie Ergen, chairman of US DTH giant and one-time suitor Dish Network.
The satellite/terrestrial venture’s bankruptcy judge said yesterday she was…
LightSquared has been cleared to take an extra loan from a group that includes a fund linked to Charlie Ergen, chairman of US DTH giant and one-time suitor Dish Network.
The satellite/terrestrial venture’s bankruptcy judge said yesterday she was prepared to approve the US$33m short-term loan, which was competing with proposals from a group of hedge funds and private equity firm Fortress Investment Group.
A bankruptcy filing shows Ergen’s SP Special Opportunities vehicle will provide 53% of the DIP debt, with LightSquared’s hedge fund owner Harbinger Capital Partners not among the other lenders.
The deal could be a significant move as Ergen and Harbinger head Philip Falcone continue to jostle for position in the venture’s increasingly convoluted Chapter 11 process.
LightSquared needed the extra funding to keep afloat after March as its bankruptcy looks set to drag on.
In January, Dish gained tentative approval from the bankruptcy court judge to withdraw its US$2.2bn offer to buy the group’s main spectrum assets, despite protests from some creditors.
That offer came after Ergen had already become LightSquared’ largest creditor, prompting the venture and Harbinger to launch legal action over whether the debt buys were improper.
LightSquared was subject to rival restructuring proposals apart from Dish, and in another shake-up the group told the court recently that it will seek a compromise with all its creditors.
It had previously been pursuing a US$4bn plan supported by JP Morgan, Fortress and private lending group Melody Capital Partners. Although that plan was also backed by Harbinger, there was another proposal from Mast Capital Management and US Bank National Association, involving the sale of some of LightSquared’s smaller assets.
LightSquared filed for voluntary reorganisation under Chapter 11 bankruptcy protection back in May 2012, after spectrum it planned to use for a nationwide LTE network was found to interfere with GPS.
The company is still talking to regulators for a way around these spectrum interference concerns. However, around the same time that Dish pulled its offer, the FCC submitted a bankruptcy court filing to state it was unsure whether it would be able to approve its planned network by the end of 2014.
