LightSquared, Creditors Agree To One-Week Extension

May 1 2012 | 3:10am ET

LightSquared, the embattled wireless Internet venture backed by Harbinger Capital Management, won a one-week reprieve from either a default or a bankruptcy filing yesterday.

The company's creditors agreed to extended a waiver on covenants linked to $1.6 billion in debt. The two sides are continuing to work on a longer-term agreement; LightSquared has technically been in breach of the covenants since the Federal Communications Commission revoked a preliminary waiver in response to concerns that LightSquared's network would interfere with global positioning systems.

That decision has sent Harbinger and its founder, Philip Falcone, scrambling to save their $3 billion investment in LightSquared. Falcone has publicly mused about a bankruptcy filing, calling it the best way for Harbinger, which owns 96% of LightSquared, to maintain control of the company.

LightSquared's creditors, among them Carl Icahn and Appaloosa Management, do not want to see a bankruptcy filing, obviously. And they also don't want to see Falcone as LightSquared's public face anymore: A long-term deal, which could give LightSquared as much as two years of breathing room, could see Falcone stepping down from LightSquared's board as well as an agreeing not to put LightSquared into voluntary bankruptcy.

The precise parameters of such a deal remain unclear. Creditors would reportedly like to see Falcone made personally responsible for the debt if he pushes LightSquared into bankruptcy or the naming of a director or group of directors with veto power over a bankruptcy filing. While Falcone is believed to accept the need for him to step away, it is unclear that he has approved either of the other provisions.

A group of LightSquared's creditors, including Icahn, hired a high-powered bankruptcy lawyer last month. But Icahn took pains yesterday at a New York investment conference to downplay his fight with Falcone, who as late as March was attempting to enlist him as an ally.

The media is "making this into this huge shoot-out that it's really not," Icahn said.

"We don't call the shots in that deal," he added. "We have one seat on the committee out of six" and a "relatively small position" in LightSquared debt.


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.