LightSquared, Lenders Still Working On Deal

May 7 2012 | 3:37pm ET

LightSquared and its lenders continued to talk about a long-term deal after the latter gave the Harbinger Capital Management-backed wireless Internet venture another one-week extension on a debt covenant waiver.

The two sides are still trying to hammer out an agreement that would avoid either a default declaration against the company or a bankruptcy filing. Harbinger chief Philip Falcone is said to favor the latter, while creditors are said to be eager to avoid it. Debt holders gave LightSquared its first extension on April 30; such extensions became necessary when the Federal Communications Commission revoked LightSquared's preliminary waiver earlier this year, a move that put LightSquared in breach of $1.6 billion in debt covenants.

The two sides are still at odds over a so-called "bad boy" clause that would make Falcone personally responsible for the debt if he was found to have influenced an eventual bankruptcy filing. But Falcone is balking at accepting both that requirement and one that would force him to step down from LightSquared's board.

Creditors are pushing other "bankruptcy-remote" clauses in a long-term deal, as well as a possible restructuring that would give them equity stakes in the company. Currently, Harbinger owns about 96% of LightSquared's stock.


In Depth

Q&A: Old Hill's Stone On Private Debt, P2P And Credit Bubbles

Jun 6 2017 | 7:52pm ET

While institutional capital continues to flow into the broader private debt sector...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

AIMA: How The U.K.'s SMCR Will Affect U.S. Firms

Jun 20 2017 | 6:29pm ET

U.S. investment managers need to think seriously about how tough new U.K. conduct...

 

From the current issue of