LightSquared has reached a tentative bankruptcy deal that does not include the satellite/terrestrial venture’s largest debt holder Charlie Ergen, according to a court filing.
Its mediator Judge Robert Drain said the plan, which reportedly includes…
LightSquared has reached a tentative bankruptcy deal that does not include the satellite/terrestrial venture’s largest debt holder Charlie Ergen, according to a court filing.
Its mediator Judge Robert Drain said the plan, which reportedly includes private equity firm Cerberus Capital Management LP, “should be confirmable” even without the support of Ergen’s SPSO vehicle.
He also blasted Ergen and SPSO for leaving the mediation without permission before it was due to end on 24 June, saying they had not participated in the process “in good faith and have wasted the parties and the mediator’s time and resources”.
He added: “I understand the seriousness of this assertion; it is unique in my experience as a mediator in a field where the parties are known to assert their positions aggressively and sharp elbows in negotiations, although not welcome, are tolerated.”
LightSquared’s reorganisation plan is now awaiting approval from the company’s bankruptcy court judge, who forced its equity and debt holders into mediation last month after they failed to reach a deal during its two years in Chapter 11.
The new plan comes just a few weeks after Philip Falcone, who heads LightSquared’s majority equity holder Harbinger Capital Partners, stepped down from the venture’s board.
Falcone had been fiercely striving to keep control of the company and was seen by some as an impediment to getting a deal done in the case so far.
He had previously given his blessing to an earlier bankruptcy plan that would have repaid Ergen’s around US$1bn in claims over several years in debt, rather than cash like other lenders.
That scheme also had the backing of LightSquared’s other creditors and investors, Fortress Investment Group, Melody Partners and JP Morgan, but was rejected by bankruptcy court Judge Shelley Chapman as she believed it was unfair on Ergen, who is also chairman of DTH giant Dish Network.
Falcone and Ergen’s long-running battle to one up each other has seen Dish make a US$2.22bn bid for LightSquared only to withdraw the offer at the last minute, as well as accusations that the satellite TV billionaire bought his debt holdings improperly in the first place.
The venture filed for voluntary reorganisation back in May 2012, giving it breathing room from creditors while it seeks a way around GPS interference concerns that are stopping it from launching an LTE network.
