Sunday, 24 July 2016
Last updated 1 day ago
Jul 9 2013 | 12:23pm ET
A hedge fund linked to a Dish Network founder has fraudulently bought up nearly $1 billion in a Harbinger Capital Management-backed wireless Internet venture's debt, Harbinger alleges.
The New York hedge fund last week accused Sound Point Capital of serving as a front for Dish Chairman Charlie Ergen, who covets LightSquared's share of the electromagnetic spectrum. Dish itself is barred from purchasing LightSquared debt.
In a bankruptcy court filing on Wednesday, Harbinger said that "Sound Point fraudulently entered LightSquared's capital structure" in a bid to block its reorganization and to "acquire the debtors' assets on the cheap"—all at the behest of Ergen, who is close to Sound Point founder Stephen Ketchum.
In its filing, Harbinger said that its fellow hedge fund is "not a legitimate creditor" and that it should not be compensated under his reorganization plan.
LightSquared has until July 15 to submit that plan; after that, any creditor can offer a plan of their own—including Sound Point. LightSquared's plan would see Jefferies Group raise $2.2 billion to repay creditors. But that plan is contingent on LightSquared's winning federal approval for a spectrum swap, since its current spectrum interferes with global positioning systems.
Ergen has offered $2 billion to buy LightSquared's spectrum.