Centerbridge backs away from deal for LightSquared

Dish Network still lurks as a buyer
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Private equity firm Centerbridge Partners has dropped its $3.3 billion bid to buy LightSquared out of bankruptcy protection, but LightSquared said it is exploring a similarly structured deal with others. Meanwhile, Dish Network (NASDAQ: DISH) continues to lurk as a potential buyer for LightSquared.

Centerbridge backed away from a potential offer "for economic and noneconomic reasons," a LightSquared lawyer said at a hearing Tuesday in Manhattan bankruptcy court, according to the Wall Street Journal. Centerbridge didn't immediately respond to a request for comment, according to the Journal.

"The architecture of the transaction essentially remains in place," Paul Basta, a lawyer for a special committee exploring LightSquared's bankruptcy options, said at the hearing. He said existing investors, including Philip Falcone's Harbinger Capital Partners and Fortress Investment Group, are still working on their own reorganization plan for LightSquared. Harbinger owns a controlling interest in LightSquared.

Centerbridge last week put forward a conditional offer worth roughly $3.3 billion for LightSquared, which included assuming about $1.7 billion in various liabilities, the Journal had reported, citing unnamed people familiar with the matter. The Centerbridge plan included a number of contingencies, including FCC approval for LightSquared to build out a wireless network via swapping out some of its spectrum holdings for others.

Dish's $2.2 billion bid for LightSquared, which is unconditional, was made earlier this year and was to serve as the lead bid in the bankruptcy auction, but the auction was called off last week as LightSquared negotiated with Centerbridge. Interestingly, the Journal noted that while the deadline for Dish to end its bid has passed, neither side has filed the paperwork to end it officially.

At the heart of the matter is a battle over LightSquared's L-Band spectrum, which Dish is seeking to acquire to enhance its spectrum holdings. LightSquared entered bankruptcy protection in May 2012 after the FCC revoked its conditional license to operate because of unresolved concerns that its planned LTE-based network would interfere with GPS receivers.

Dish's bid was filed by a group of LightSquared lenders that are owed nearly $2 billion. LightSquared is pursuing a lawsuit against Dish Chairman Charlie Ergen over his acquisition of LightSquared debt. LightSquared argues that Ergen bought the beleaguered company's debt on behalf of Dish and not himself. Such purchases are illegal under LightSquared's credit agreement, which prohibits competitors from buying the debt, the company said.

For more:
- see this WSJ article (sub. req.)
- see this separate WSJ article (sub. req.)

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