US wireless venture LightSquared is on course to emerge from bankruptcy this month after getting permission to transfer spectrum licenses to a newly restructured group. The FCC approved the satellite/terrestrial venture’s change of control application on Friday, paving the way for a ‘new LightSquared’ company to carry on the search for a way around its GPS interference issues.
US wireless venture LightSquared is on course to emerge from bankruptcy this month after getting permission to transfer spectrum licenses to a newly restructured group.
The FCC approved the satellite/terrestrial venture’s change of control application on Friday to allow for the creation of a ‘new LightSquared’, which will take on its predecessor’s hopes of finding a way around the GPS interference issues that helped push it into Chapter 11 protection in May 2012.
Its bankruptcy exit now just awaits a letter about the mid-band spectrum transfer that must be sent to US Bankruptcy Judge Shelley Chapman, who earlier approved the company’s reorganisation plan on 26 March 2015.
The new LightSquared’s incoming chairman Ivan Seidenberg, the former chair of US telecoms giant Verizon Communications, said: “We intend to do everything possible to achieve a reasonable business solution as well as an engineering consensus between wireless broadband and the GPS industry.
“We recognise that our number one job will be to resolve technical issues and liberate scarcely-used satellite spectrum that’s actually ideal for the cellular industry. I am confident we can reach a mutually-acceptable outcome that not only makes industry better off but also benefits consumers of wireless and GPS products.”
LightSquared filed for voluntarily bankruptcy protection to give itself breathing space from creditors, soon after the FCC blocked its network rollout because some of its spectrum was found to interfere with GPS technology.
Helping to guide the venture through its regulatory issues will be Reed Hundt, who was chairman of the FCC between 1993 and 1997 and is joining the restructured firm as a board member.
One of the options it has floated in the past involves sharing government spectrum to make up for not using some of its own airwaves.
Doug Smith, the former COO of LightSquared who was elevated to CEO early on in the bankruptcy, said on Friday: “We are very appreciative for today’s FCC action which will allow LightSquared to begin anew and recommit to work with all stakeholders to resolve important technical matters, identify necessary solutions, and remove regulatory uncertainty that the company has faced over the past three and-a-half years.
“We will emerge from restructuring with new owners representing some of the world’s top investors, and they have committed significant new capital to give the company the runway it needs to grow and operate the business.”
The investors – Centerbridge Partners, Fortress Investment Group and JP Morgan – are sharing the ownership of the new company with hedge fund Harbinger Capital Partners, which used to own most of LightSquared’s equity but has been left with a 44% stake and no say in day-to-day operations.
During the bankruptcy, Harbinger head Philip Falcone had wrestled for control of the venture with Charlie Ergen, the CEO of US DTH giant Dish Network who became LightSquared’s largest creditor with more than US$1bn in debt.
Its restructuring plan, backed with a US$1.5bn exit financing facility arranged by Credit Suisse, Jefferies, and Morgan Stanley, will see Ergen’s debt repaid in full.
