The struggling US satellite/terrestrial venture LightSquared said today that it is renegotiating the terms of its agreement with UK-based satellite operator Inmarsat and expects to have a new agreement “in the next few weeks”.
LightSquared said in a…
The struggling US satellite/terrestrial venture LightSquared said today that it is renegotiating the terms of its agreement with UK-based satellite operator Inmarsat and expects to have a new agreement “in the next few weeks”.
LightSquared said in a statement that, given the uncertainty currently surrounding its use of L-band spectrum for a wireless terrestrial network, it was renegotiating the deal with Inmarsat.
It emphasised that it is still committed to fulfilling its business plan and still sees Inmarsat as “an important partner”.
Earlier in the day, Inmarsat had said that LightSquared had failed to make a payment of US$29.6m, which had been scheduled for 31 March.
Inmarsat said that it had issued a notice of default to LightSquared today.
The British satellite operator described the possibility of LightSquared making any further payments as “highly uncertain”.
Inmarsat also said it was still in discussions with LightSquared concerning the future of their agreement.
But the satellite operator added that it “cannot provide any assurance that these discussions will result in any further payments being received from LightSquared”.
Under the agreement, Inmarsat has leased 10MHz of L-band spectrum to LightSquared.
But regulators have stopped the US company from offering services due to concerns that its technology interferes with GPS systems.
Notice of default
Inmarsat’s notice of default today gives LightSquared 60 calendar days to make the US$29.6m payment. If that does not happen, Inmarsat said that it would be “entitled to enforce its rights and remedies” under the agreement between the companies.
These include the termination of some of LightSquared’s rights under the agreement.
The US$29.6m payment, which related to a second phase in the agreement, was due on 31 March.
Inmarsat added that it had issued a completion notice on “Phase 1.5” of the agreement on 30 March, which meant that another payment would be due on 4 April.
The phased agreement between the companies was aimed at expanding the amount of contiguous spectrum available for the provision of LightSquared’s planned wireless broadband services.
Phase 1.5 was an amendment to the agreement between the companies, which meant if Inmarsat could deliver part of the agreement before the original target date, LightSquared would make a payment for the early delivery.
Second missed payment
This follows another missed payment of US$56.25m by LightSquared in February.
Inmarsat issued LightSquared with a notice of default then.
The US$56.25m payment was meant to come after the completion of the first phase of the agreement. Under the notice of default that Inmarsat issued on 20 February, LightSquared has until 20 April to make that payment.
At the time, LightSquared said: “The terms of the agreement allow for additional time to resolve pending questions before phase one is complete and the final payment is due.”
