The creditors of satellite / terrestrial LTE venture LightSquared have given the company an extra week as it seeks to avoid defaulting on its first lien debt.
According to reports, the holders of the US$1.6bn debt have agreed to extend the loan waiver…
The creditors of satellite / terrestrial LTE venture LightSquared have given the company an extra week as it seeks to avoid defaulting on its first lien debt.
According to reports, the holders of the US$1.6bn debt have agreed to extend the loan waiver until 7 May to give both sides more time to negotiate a potential restructuring of the debt.
In return for this extension, one rumoured demand from the creditors has been for Phil Falcone, the manager of the venture’s main shareholder Harbinger Capital Partners, to step down from the LightSquared board.
In addition, the first lien lenders have allegedly demanded provisions that would prevent Harbinger from taking LightSquared into Chapter 11 bankruptcy protection. In an interview in early April, Falcone suggested that filing for bankruptcy protection was an option being considered and that the LightSquared shareholders, overwhelmingly Harbinger which holds a 96% stake, would not necessarily see their equity wiped out if such an event took place. The reason for this is that Falcone still sees an inherent value in LightSquared’s 2GHz spectrum despite the potential interference issue with GPS devices and this value would remain whether LightSquared entered bankruptcy or not.
Among the first lien lenders are activist shareholder Carl Icahn, distressed asset specialist David Tepper, and hedge funds Fortress Investment Group, Knighthead Capital Management, Redwood Capital Management and Capital Research & Management Company (part of the Capital Group).
Both LightSquared and its creditors still hope to persuade the FCC to rescind its decision to block the planned network rollout. The FCC made its determination in February following the announcement by the NTIA, the US President’s adviser on telecoms and technology policy, that LightSquared’s technology would cause potential interference to GPS systems.
LightSquared is rumoured to have hired Moelis & Co to look at the venture’s restructuring options, while Kirkland & Ellis and Latham & Watkins have been providing legal advice to Harbinger.