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

JOBS Act Propels Real-Estate Crowdfunding Platform

Oct 21 2014 | 2:57am ET

If D.J. Paul were a real estate development, he would be described as “multi-use...

Lifestyle

MacDonald-Korth Offers Insights Into Paintings Bought, Sold By Hedgies

Oct 7 2014 | 9:00am ET

Definitive and complete ratings require an in-person examination of an artwork,...

Guest Contributor

PAAMCO: European Equity Exposure - Challenging Year, But All is Not Lost

Oct 16 2014 | 4:12am ET

European equity hedge fund managers have had a tough time so far this year. The...

 

Videos

Editor's Note

    Must Attend Hedge Fund Charity Events For October

    Sep 30 2014 | 9:29am ET

    The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…

 

Futures Magazine

October 2014 Cover

Deeply flawed risk benchmark

Most traders agree that proper risk management is the key to successful trading. However, many traders depend on the deeply flawed measure of standard deviation as a benchmark of risk. Here we put it ...

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.