Harbinger Takes $190 Million Loan

Feb 9 2012 | 4:59am ET

Harbinger Capital Partners is an awfully risky bet, according to its lenders.

The New York-based hedge fund, which has more than half of its assets tied up in LightSquared, a controversial wireless Internet venture currently in regulatory limbo, has taken out a $190 million loan from Jefferies Group. The new borrowing is less than half the $400 million in debt that Harbinger paid off at the end of last month, but it comes at a hefty price: a 15% interest rate, almost three times the average rate paid by junk-rated companies and more, even, than the average annual rate for credit card customers.

The recently paid-off loan, issued by UBS, carried a 10% interest rate.

The Jefferies loan, which netted Harbinger $160 million, matures on Oct. 31. The hedge fund will pay the interest monthly, with two $47.5 million prepayments due on April 30 and July 31.

The loan is secured by Harbinger's assets, with Jefferies getting the first crack at any proceeds from an asset sale.


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