Ergen Calls LightSquared Plan Unfair, Says Dish Abandoned Bid Due To Technical Issues

Mar 27 2014 | 2:43pm ET

Dish Network founder Charles Ergen told a federal bankruptcy judge yesterday that Harbinger Capital Partners’ wireless internet venture would treat him unfairly under a proposed restructuring.

Ergen owns $850 million in LightSquared’s bank debt. But while other holders of that debt would be paid in full under the Fortress Investment Grou-backed plan, Ergen would get a third-lien note that would be repaid over seven years.

Testifying yesterday, Ergen said he does not believe that would happen.

“I think the value is severely reduced,” Ergen said of LightSquared. “The collateral does not cover my investment.”

LightSquared and its other lenders have argued that Ergen deserves the different treatment because he bought the debt in contravention of covenants barring competitors from doing so. LightSquared alleges that Ergen bought the debt to stymie its bankruptcy exit, allowing Dish to swoop in and acquire its share of the electromagnetic spectrum at a discount.

Ergen says he bought the debt as a personal investment.

Lawyers for LightSquared pounded Ergen with his own words, noting as recently as July he estimated LightSquared’s spectrum to be worth $7 billion. Ergen was also asked to explain Dish’s $2.2 billion bid for LightSquared at a cancelled bankruptcy auction, an offer Dish later withdrew.

U.S. Bankruptcy Judge Shelley Chapman, who is considering whether to approve LightSquared’s bankruptcy plan and whether Ergen should be punished for buying the debt, closed the courtroom for that discussion. Ergen has said Dish dropped out of the bidding due to “an inkling of a technical issue” that would severely impair the spectrum’s value.

Harbinger founder Philip Falcone is expected to testify in the hearing next week.


In Depth

Don’t Overlook These 6 Hybrid Cloud Concerns

Sep 14 2017 | 6:27pm ET

Cloud-based technology solutions have made tremendous inroads into the alternative...

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

Cash: An Asset In Adolescence

Aug 31 2017 | 3:34pm ET

If the investment industry has a rebellious teenager in the house today, that teenager...

 

From the current issue of