LightSquared has secured bankruptcy court approval for a restructuring plan that will see it exit Chapter 11 proceedings after three years of wrangling.
Judge Shelley Chapman gave the US satellite/terrestrial venture the go-ahead after it finally…
LightSquared has secured bankruptcy court approval for a restructuring plan that will see it exit Chapter 11 proceedings after three years of wrangling.
Judge Shelley Chapman gave the US satellite/terrestrial venture the go-ahead after it finally reached an agreement with Charlie Ergen, its biggest creditor with more than US$1bn in debt.
The new deal will pay Ergen about US$1.5bn in cash, reflecting interest, whereas earlier proposals would have seen the chairman of local DTH giant Dish Network being repaid with debt.
It is being made possible by a fresh financing commitment of a similar size from Jefferies.
The agreement proved to be a key turning point for the litigious bankruptcy case that has seen Ergen battle with Philip Falcone, head of LightSquared’s majority equity owner Harbinger Capital Partners, for control of the venture over the past few years.
A rival bid from Solus Alternative Asset Management and Cerberus Capital Management was also scrapped recently when LightSquared agreed to buy back their preferred stock and debt.
Harbinger will keep more than 44% of LightSquared’s equity under its approved restructuring plan, although it will not have a say in the group’s day-to-day operations.
Investors Centerbridge Partners and Fortress Investment Group will own a combined 34% stake, as well as the right to appoint board members. JPMorgan Chase & Co will own LightSquared’s Inc unit, including the tax benefits derived from its net operating losses.
LightSquared CEO Doug Smith said: “This is a new day for the company and our employees, and I am excited to get back to work, alongside our world-class leadership team, to the business of deploying our spectrum for the benefit of the American people.
“This has been a long journey, and today’s ruling will allow us to emerge from Chapter 11 well-capitalised and better positioned to achieve our goals.”
The group had seen a myriad of failed restructuring proposals since it filed for voluntary Chapter 11 bankruptcy back in May 2012, after its spectrum was found to interfere with GPS technology.
It is still talking to regulators for a way around the interference concerns that are preventing it from deploying an LTE network.