Sprint To Junk LightSquared Deal

Mar 7 2012 | 3:35pm ET

LightSquared's most important customer appears disinclined to wait for the Harbinger Capital Management-backed wireless Internet company to make a last-ditch effort for survival before ending its deal.

Sprint Nextel Corp. will pull the plug on its $13.5 billion agreement with LightSquared as soon as next week. The move comes after the Federal Communications Commission last month said it would withdraw LightSquared's preliminary approval and would not give it any further approvals due to interference with global positioning systems.

The FCC did give LightSquared an extra two weeks, until March 15, to make its case to the regulator. That day is also the most recent deadline Sprint has set for LightSquared to win final regulatory approval, but Sprint does not plan to give LightSquared another extension, Bloomberg News reports.

Sprint could see its right to terminate extended until June 25 if LightSquared lenders approve changes to its deal. Either way, if the deal is dead, Sprint will get to keep $236 million of the $310 million LightSquared has already paid it.

Sprint isn't alone among LightSquared's partners mulling the company's future. Nokia Siemens Networks, which, like Sprint, was engaged by LightSquared to build its wireless network, said it stopped work on its part last year—at LightSquared's request. And satellite company Inmarsat—which Harbinger chief Philip Falcone once dreamed of merging with LightSquared—told investors yesterday that it can't be sure it will see another dime from its deal with LightSquared.

"While we have a contract with LightSquared, they previously asked us to put our activities related to the network build on hold while they resolve" their regulatory issues, a Nokia Siemens spokesman said.

Inmarsat investors should "take a very conservative stance on payments being received," CEO Rupert Pearce said yesterday. There is "significant uncertainty" about LightSquared's future ability to make payments, and the company is already in default on a $56.3 million payment due last month.

LightSquared payments had been the "primary driver" of sales growth for Inmarsat last year.


In Depth

Q&A: Pantheon’s McCrary Says Private Equity Market ‘Robust’

Dec 17 2014 | 8:32am ET

Dennis McCrary is a partner at Pantheon, a private equity firm with $32.2 billion...

Lifestyle

Cohen Donates $1.5M To GOP Governors Association

Dec 10 2014 | 7:13am ET

The Republican Governors Association raised close to $25 million from October 1...

Guest Contributor

Q&A With Daniel Gallancy: Institutional Interest In Bitcoin Is Growing Steadily

Dec 12 2014 | 7:54am ET

Daniel Gallancy is founder and CEO of SolidX, a provider of total return swaps for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.