With debt purchase, Icahn sets sights on LightSquared

Billionaire investor Carl Icahn has purchased debt of LightSquared, according to the Wall Street Journal, a move that could give the investor control over the troubled wholesale LTE provider if the company runs out of money and is forced to restructure or file for bankruptcy.

Icahn, along with two other investors, purchased roughly $300 million in LightSquared debt. Those involved in the transaction declined to comment, according to the WSJ. LightSquared in total has obtained around $1.6 billion in loans.

Icahn got his start by purchasing the debt or stock of distressed companies. He has since dabbled in a range of companies as an activist investor, notably Motorola during the company's Razr heyday.

Icahn's purchase of LightSquared debt pits the investor against Philip Falcone, a billionaire who also initially made a business in the debt and stock of troubled companies. Now, through his Harbinger Capital Partners hedge fund, Falcone is working to push LightSquared into the wireless market by redeploying satellite spectrum for a terrestrial mobile broadband network. Falcone's fund has invested almost $3 billion in LightSquared.

Icahn appears to be circling the wounded LightSquared, which is battling regulators for approval to build its nationwide wholesale LTE network. The GPS industry is concerned that LightSquared's network will interfere with precision GPS receivers--an argument LightSquared disputes. But LightSquared has warned it only has enough cash to fund operations for the next few quarters, creating worries that LightSquared doesn't have the financial wherewithal to endure a protracted dispute with federal regulators. Indeed, according to the WSJ, the value of LightSquared's loans has declined from around 100 cents on the dollar in June to around 40 cents in December--likely sparking Icahn's interest in the company.

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

Related Articles:
LightSquared blasts U.S. GPS interference tests, says Sprint is in the loop
Sprint puts LightSquared pact on hold while awaiting word from regulators
LightSquared lands deadline extension from Sprint
LightSquared presses FCC to let it launch LTE service
Report: LightSquared could run out of cash in Q2 of next year

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