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: Open Season For Closed-End Funds

Aug 29 2014 | 10:00am ET

When Maury Fertig and Bob Huffman, former Salomon Brothers coworkers, launched...

Lifestyle

Och Funds Women In Finance Initiative At U-M

Aug 28 2014 | 3:01pm ET

Och-Ziff Capital founder Daniel Och and his wife have made a "generous donation"...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

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.