Monday, 8 February 2016
Last updated 2 days ago
Feb 9 2012 | 3:59am 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.