LightSquared: Icahn sells holdings, company keeps battling default

LightSquared investor Carl Icahn has sold his debt holdings in the company to an investment firm with a past Dish Network link, while LightSquared has gained some breathing room in negotiations to avoid defaulting on $1.6 billion in debt, according to reports.

Icahn sold $250 million in LightSquared debt holdings last Thursday for about 60 cents on the dollar, according to a report from Reuters. The Reuters article indicated that Icahn made money on the sale, as he had paid roughly 40 cents on the dollar to acquire the debt months ago.

Reuters identified the buyer of Icahn's debt as Sound Point Capital, a three-year-old investment firm headed by Stephen Ketchum, whose client list when he previously worked as investment banker included satellite-TV provider Dish Network. Dish hopes to launch a terrestrial LTE Advanced network using S-band satellite spectrum pending the FCC's rulemaking later this year on opening up satellite spectrum in the 2 GHz MSS band for mobile terrestrial use.

In earlier articles on Sunday, both Reuters and Bloomberg reported that LightSquared's debt holders, which had included Icahn, agreed to extend the deadline for talks regarding the restructuring of the 96 percent LightSquared stake held by Philip Falcone's Harbinger Capital Partners hedge fund. Harbinger has been negotiating with the creditors to avoid a default on $1.6 billion in LightSquared debt.

The creditors have threatened to declare a default on the debt if a restructuring agreement is not reached. The first deadline they set was April 30, which was extended to May 7 and has now reportedly been moved to May 14.

Prior to the May 7 extension, it was widely reported that LightSquared's bondholders were pushing to move Philip Falcone, the head of hedge fund Harbinger Capital partners, out of his role as the public face of LightSquared. The creditors reportedly insisted that Falcone not be allowed to serve as an officer of LightSquared and that he would eventually step down as a LightSquared director. The debt holders are said to want an independent board to oversee LightSquared.

The FCC in February revoked a conditional waiver for LightSquared to build a wholesale LTE network due to GPS interference concerns related to the 1.6 GHz L-band spectrum that LightSquared intended to employ. LightSquared has been battling to stay afloat ever since.

Last month, LightSquared agreed to pay satellite operator Inmarsat $56.3 million it had been withholding since February, and under the terms of a revised deal between the two companies, LightSquared will not have to make any further payments to Inmarsat until April 2014. The agreement allows LightSquared to retain access to some of Inmarsat's L-band satellite spectrum.

For more:
- see this Reuters article
- see this Bloomberg article

Related articles:
Report: Creditors want to push Falcone out as face of LightSquared
Dish chairman: Without LTE, we're 'a one-trick pony'
LightSquared to pay Inmarsat $56.3M, delays further payments until 2014
Lawmakers press FCC to give LightSquared new spectrum
Rumor Mill: LightSquared nearing bankruptcy
LightSquared implies Dish is getting preferential treatment

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