US hedge fund Harbinger Capital Partners is reportedly considering whether to place the satellite/terrestrial venture LightSquared into voluntary bankruptcy.
LightSquared could be placed into bankruptcy to keep creditors at bay and salvage the…
US hedge fund Harbinger Capital Partners is reportedly considering whether to place the satellite/terrestrial venture LightSquared into voluntary bankruptcy.
LightSquared could be placed into bankruptcy to keep creditors at bay and salvage the embattled venture that reported a US$427m net loss for the first nine months of 2011, reported Reuters citing Philip Falcone, the hedge fund’s manager.
Falcone reportedly said in an interview that bankruptcy was one of several options being considered. Such a bankruptcy would not necessarily mean that the group’s equity holders would be wiped out, he claimed.
According to Falcone, LightSquared’s spectrum still retains value. This is despite the concerns that LightSquared’s spectrum and technology may interfere with GPS systems.
Harbinger was unable to comment before the press deadline.
Citing two people familiar with the situation, Reuters also reported that LightSquared’s creditors, including the hedge funds headed by Carl Icahn and David Tepper, are considering whether to declare the group to be in default of a US$1.6bn loan.
The report added that some of Harbinger’s creditors have threatened to force LightSquared into bankruptcy if Harbinger is unable to revive its fortunes by the end of April.
Falcone’s reported comments are in stark contrast to the defiant note he struck in a call to investors on 17 February, after the FCC ruled that LightSquared would not be able to launch commercially because of the interference problems that have surrounded its spectrum. Falcone was cited at the time rejecting suggestions that LightSquared was considering a bankruptcy filing. And, in January, the venture insisted it had enough cash to last several quarters.
