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."


In Depth

GSAM's Papagiannis: Liquid Alternatives For The Long Run

Apr 21 2017 | 8:44pm ET

Interest in liquid alternatives cooled a bit last year amid a broad shift in investor...

Lifestyle

Aston Martin Returns To Debt Market As DB11 Drives Turnaround

Mar 31 2017 | 5:21pm ET

James Bond’s preferred carmaker is returning to the public debt markets for the...

Guest Contributor

Debunking Conventional Investment Wisdom (Part II)

Apr 17 2017 | 5:56pm ET

The alternative investment industry is currently replete with buzzwords around data...

 

From the current issue of