US satellite/terrestrial venture LightSquared is reportedly close to securing a debtor-in-possession loan with a unit of US Bancorp (USB), as it battles with other lenders over access to its cash on hand.
A loan has been agreed in principle with the…
US satellite/terrestrial venture LightSquared is reportedly close to securing a debtor-in-possession loan with a unit of US Bancorp (USB), as it battles with other lenders over access to its cash on hand.
A loan has been agreed in principle with the USB unit, which represents a group of lenders holding around US$320m of debt, according to local reports citing Matthew Barr, a Milbank lawyer acting on behalf of LightSquared.
Barr did not disclose any details of the loan, except to say on 12 June that a filing was expected to be submitted in a matter of days.
LightSquared, which entered Chapter 11 bankruptcy protection on 15 May following ongoing GPS spectrum interference concerns, and Milbank were unable to comment before the press deadline.
Meanwhile, LightSquared’s fight with another group of lenders over access to its US$190m of cash on hand is continuing after a hearing on the matter was extended to 13 June.
The lenders, which include hedge funds Appaloosa Management, Fortress Investment Group and Silver Point Capital, represent around US$1bn of debt. They are calling for measures including strict budget controls on the cash, and liens on the company’s assets. LightSquared has warned the company faces liquidation if it is denied sufficient access to the capital to keep itself afloat during the restructuring process.
A hearing before Judge Shelley Chapman was taking place at the US Bankruptcy Court in Manhattan on the dispute as TelecomFinance was going to press.
Earlier in June, LightSquared won another heated battle with its lenders, when Chapman granted the company’s request to restrict the trading of its debt and stock during the restructuring process. LightSquared had successfully argued that it risked losing out on more than US$1.5bn in tax breaks if trading was permitted, because it could result in a change of ownership of the company. Currently, its equity is majority-owned by Philip Falcone and his New York hedge fund Harbinger Capital Partners.
LightSquared listed US$4.48bn in assets and US$2.29bn in liabilities in its initial bankruptcy filing. The company is using the Chapter 11 process to keep creditors at bay, while it tackles the regulatory obstacles that are currently prohibiting the launch of its nationwide 4G wireless network.
Alvarez & Marsal is financially advising LightSquared.
