LightSquared’s hedge fund owner is backing the satellite/terrestrial venture’s plan to exit bankruptcy as it claims regulatory approval to use its spectrum is “within reach”.
Harbinger Capital Partners, which had initially proposed its own…
LightSquared’s hedge fund owner is backing the satellite/terrestrial venture’s plan to exit bankruptcy as it claims regulatory approval to use its spectrum is “within reach”.
Harbinger Capital Partners, which had initially proposed its own scheme to reorganise LightSquared, said many of the venture’s constituents “have rallied around this progress to support a reorganisation plan that maximises the value of the debtors’ estates and pays all creditors in cash and in full”.
That plan was filed on 24 December and is also supported by JP Morgan, private equity firm Fortress Investment Group and private lending group Melody Capital Partners. It involves US$2.5bn in senior secured exit facility financing, a US$250m senior secured loan, and at least US$1.25bn in new equity contributions.
Melody is also offering a debtor in possession facility of at least US$285m to fund operations and also repay the DIP debt initially provided by US Bank.
By reorganising itself as a standalone company, the group estimates its worth at between US$6.7bn and US$10bn.
However, this plan is reliant upon the company successfully negotiating with regulators for a way around the spectrum interference issues that have prevented it from rolling out LTE.
It will also compete with two other proposals at a court hearing scheduled for 9 January.
The most high profile of these is an US$3.8bn opening offer put forward by US DTH giant Dish Network and, unlike LightSquared’s plan, is not subject to FCC spectrum clearance.
The other comes from Mast Capital Management and US Bank National Association, involving the sale of some of LightSquared’s smaller assets.
Before LightSquared submitted its reorganisation plan, Harbinger, JP Morgan and Fortress had been backing a move led by private equity firm Centerbridge Partners, which had hatched tentative plans to pay around US$5bn for the venture’s equity and debt. However, Centerbridge walked away from this bid just a week after the plans came to light.
