US satellite/terrestrial venture LightSquared has secured a US$1.5bn bankruptcy exit loan to fuel its reorganisation plan after three years in Chapter 11. The five-year, first-lien PIK debt priced at 97 after being quoted at 97.5/98, SatelliteFinance…
US satellite/terrestrial venture LightSquared has secured a US$1.5bn bankruptcy exit loan to fuel its reorganisation plan after three years in Chapter 11.
The five-year, first-lien PIK debt priced at 97 after being quoted at 97.5/98, SatelliteFinance understands.
Credit Suisse, Jefferies, and Morgan Stanley arranged the facility, which comes after LightSquared finally secured approval for a restructuring plan in March following several failed attempts.
The approval ended the high profile battle between billionaires Philip Falcone and Charlie Ergen for control of the group.
Falcone’s Harbinger Capital Partners hedge fund previously owned most of LightSquared’s equity, while Ergen, who is also chairman of US DTH giant Dish Network, was its biggest creditor with more than US$1bn in debt.
A turning point in their feud came after an agreement was made to pay Ergen about US$1.5bn in cash for his loan, rather than in more debt. Harbinger ended up retaining about 44% of LightSquared’s equity, although it has no say in day-to-day operations.
Investors Centerbridge Partners and Fortress Investment Group now have a combined 34% stake, while JP Morgan took LightSquared’s Inc unit, including the tax benefits derived from its net operating losses.
In April, LightSquared officially asked the FCC to approve its request to set up a mobile broadband service, in the first step towards rolling out an LTE network with satellite spectrum.
Concerns that this spectrum could interfere with GPS systems are what led to the venture applying for voluntary Chapter 11 bankruptcy in May 2012.
The group has been talking with regulators throughout the bankruptcy to find a way around these concerns.
Ergen’s Dish is also looking to use its satellite spectrum for a terrestrial LTE network. It is reportedly looking to raise up to US$15bn to buy local telco T-Mobile to help realise those plans.
