LightSquared has filed a new restructuring plan that would give hedge fund Harbinger Capital Partners a 44.4% stake but no members on the US satellite/terrestrial venture’s board. The proposal is significantly different from one it reached last month,…
LightSquared has filed a new restructuring plan that would give hedge fund Harbinger Capital Partners a 44.4% stake but no members on the US satellite/terrestrial venture’s board.
The proposal is significantly different from one it reached last month, which would have wiped out Harbinger’s current majority equity stake completely.
That earlier plan would have also transferred the majority of the equity to its largest creditor, an investment vehicle owned by Charlie Ergen, chairman of US DTH giant Dish Network. Instead, the more than US$1bn in debt from Ergen’s SPSO vehicle would be repaid through a five-year note if the latest plan is approved.
LightSquared said US$1.25bn in new funding would be injected into the group as part of the deal, which would also give private equity firms Fortress and Centerbridge stakes of 26.2% and 8.1%, respectively. Current investors of a smaller part of the company called LightSquared Inc would take the rest of the equity.
However, SPSO has not given its support to the new proposal, and a Willkie Farr & Gallagher lawyer for Ergen was yesterday cited saying that it preferred to be paid in cash.
LightSquared has been in voluntary Chapter 11 bankruptcy since May 2012 and, as well as several unsuccessful restructuring proposals, has also seen waves of legal action as Ergen and Harbinger head Philip Falcone wrestle for control of it.
As part of its latest deal, Harbinger has agreed to drop various lawsuits against entities including Ergen, the US government and representatives of the country’s GPS industry. LightSquared would also not pursue a lawsuit against Ergen that accuses him of improperly buying its debt, because of his links to Dish, which it sees as a competitor.
LightSquared filed for voluntary reorganisation after its spectrum was found to interfere with GPS technology, and the company is still talking with regulators for a way around this issue.
Meanwhile, the potential value of LightSquared’s frequencies has recently received a boost as provisional bids in the auction of AWS-3 spectrum pass US$44bn in total. Bidding is conducted anonymously, although Dish and local telcos Verizon, AT&T and T-Mobile US are widely expected to be the biggest players. There are 70 qualified bidders.