Satellite TV mogul Charlie Ergen has waded into wireless venture LightSquared’s bankruptcy with a US$2bn offer for its interference-hit spectrum.
US-based LightSquared has until the end of May to accept the stalking-horse bid, which has yet to be…
Satellite TV mogul Charlie Ergen has waded into wireless venture LightSquared’s bankruptcy with a US$2bn offer for its interference-hit spectrum.
US-based LightSquared has until the end of May to accept the stalking-horse bid, which has yet to be shown to bankruptcy court judge Shelley Chapman, TelecomFinance has confirmed.
Ergen’s bid would need Chapman’s approval for an auction of the assets to be launched, reported Bloomberg citing people familiar with the matter.
LightSquared declined to comment.
Some of LightSquared’s lenders have been calling on its hedge fund owner Harbinger Capital Partners to put the company up for auction since late last year.
However, Harbinger has an exclusive right to control LightSquared’s Chapter 11 bankruptcy process until 15 July. It has been holding off any sale as it negotiates with regulators for a way around the GPS spectrum interference concerns that are holding it back 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.
Dish Network, Ergen’s DTH operator, has been accelerating efforts to find a spectrum partner for its own plans to deploy a 4G network with what were previously satellite frequencies.
The company had been due to find out today whether shareholders of US telco Clearwire have voted to be bought by Dish’s rival suitor Sprint, before this deadline was extended.
As well as Clearwire, Dish is seeking to buy number three US mobile operator Sprint in a US$25.5bn deal. After securing commitments for a US$9bn financing package, the DTH operator was yesterday given permission to conduct due diligence on Sprint, which has also received an offer from Japan’s Softbank.
Ergen had been linked with LightSquared previously through his alleged ties with investment firm Sound Point Capital, which has reportedly been buying up the venture’s debt.
However, the Wall Street Journal claimed Ergen’s recent all-cash bid is unrelated to those debt purchases.
Court rules prohibit a “strategic player” from buying LightSquared’s debt while its bankruptcy proceedings are taking place. The matter could prompt litigation if Ergen was seen to be using Sound Point to get around the provision, although his all-cash offer reportedly avoids this issue altogether.
A US$2bn bid would be enough to pay off LightSquared’s roughly US$1.7bn of debt, but it is unclear whether Harbinger would be willing to relinquish its equity in the group.
As TelecomFinance was going to press, Sprint had just upped its offer to take over Clearwire by 14% to US$3.40 per share. Clearwire shareholders had been due to vote on the deal today, but following the increased offer the deadline was extended to 30 May. Dish’s offer for Clearwire, which came after Sprint’s initial bid, represents US$3.30 per share.
