LightSquared Running Out Of Cash

Dec 20 2011 | 1:29pm ET

Despite billions in financing from Harbinger Capital Partners, wireless internet venture LightSquared is on the verge of running out of money.

Financial statements reviewed by Reuters show that the Reston, Va.-based company may not be able to "continue as a going concern" beyond the second quarter of next year without additional capital. "There is a need to raise substantial capital beyond the beginning of the second quarter of 2012 in order to have sufficient liquidity," the statement said.

LightSquared took a $427 million net loss during the first three quarters of 2011. But recent weeks have seen the company suffer a series of setbacks, including tests showing that its system interferes with 75% of global positioning system devices and a Securities and Exchange Commission probe into its biggest backer, Harbinger founder Philip Falcone.

Harbinger has provided more than $3 billion in investments and loans to LightSquared, out of its $5 billion in assets under management.

Despite the bleak tone of the statement and the note about needing additional capital, a LightSquared spokesman told Reuters that it "has cash through the next several quarters" and will not need to raise more money until the Federal Communications Commission approves its plan to counter GPS interference.

The statement does show that LightSquared has $4.64 billion in assets, including $2.44 billion in licenses, and "significant cash commitments" from customers. But it still warns that "if the company fails to obtain the necessary financing on a timely basis, the execution of the company's business strategy could be materially delayed, costs could materially increase or the company may have to discontinue operations or seek a purchaser for the business or assets."

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