Saturday, 25 March 2017
Last updated 1 day ago
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.