US satellite/terrestrial venture LightSquared is being allowed to pursue an exit financing deal in its first step towards emerging from Chapter 11 protection.
LightSquared’s bankruptcy court judge said it could move forward with a senior secured term…
US satellite/terrestrial venture LightSquared is being allowed to pursue an exit financing deal in its first step towards emerging from Chapter 11 protection.
LightSquared’s bankruptcy court judge said it could move forward with a senior secured term loan that it has agreed with Jefferies, which would enable the group to begin repaying creditors.
The agreement includes an US$80m commitment from its hedge fund owner Harbinger Capital Partners to fund fees connected to the undisclosed loan.
Submitting a letter of engagement for court approval on 31 May, LightSquared said: “The exit financing contemplated by the engagement letter will serve as the cornerstone of a standalone plan of reorganisation for LightSquared that will most likely provide for full payment to all creditors and the retention of equity interests by shareholders.
“LightSquared believes that this plan will most likely bring more value to all of its stakeholders than any other, and such plan hinges on obtaining the proposed exit financing.”
An accelerated court hearing to discuss the matter took place on 6 June.
The company has an exclusive right to control LightSquared’s bankruptcy process until 15 July. It has been using this exclusivity period to hold back creditors from putting its assets up for auction, while it negotiates with regulators for a way around the GPS spectrum interference concerns that have prevented it from launching a terrestrial 4G network.
The venture was recently allowed to test its plan to sidestep these concerns by temporarily swapping the afflicted spectrum with frequencies held by the US government.
According to LightSquared, as the termination date of its exclusivity period neared, it contacted several financial institutions as it became apparent that its plan of reorganisation would likely be premised on obtaining sufficient financing.
It said it Jefferies was ultimately chosen to act as sole and exclusive manager, placement agent and arranger for the loan, which has not been disclosed.
The company listed around US$4.48bn in assets and US$2.29bn in liabilities as of 29 February 2012. It is continuing to be financially advised by Moelis & Company.
