The fight for control of bankrupt wireless firm LightSquared continues to drag on, with Philip Falcone's Harbinger Capital Partners hedge fund submitting a new reorganization plan days after it seemed Falcone would be cut out of the company in a competing restructuring plan.
Meanwhile, Bloomberg noted that Mast Capital Management has said it may put forward its own reorganization plan for LightSquared, which would split up LightSquared and separately reorganize debt at the "LightSquared Inc." and "LightSquared LP" divisions, which have different creditors and own different rights to wireless spectrum.
According to Bloomberg, U.S. Bankruptcy Judge Shelley Chapman said in court on Monday that she would consider a date around Oct. 20 to weigh arguments over how to reorganize the LightSquared. The judge acknowledged she may have to "pick between or among two or three confirmable plans."
Harbinger's plan would rely on $460 million in financing to fund operations in bankruptcy, $360 million of which would be converted into exit financing.
As the New York Post notes, LightSquared Inc. owns just 5 MHz of spectrum, as well as the rights to the tax losses in LightSquared, which could be valued at more than $2 billion. The LP unit controls LightSquared's larger swath of imperiled L-Band spectrum.
Falcone was offered to be a part of the larger LightSquared LP restructuring if he dropped lawsuits against the U.S. government and Dish Network (NASDAQ: DISH) Chairman Charlie Ergen, the Post reported. However, Falcone refused. Falcone has sued Ergen, accusing him of acquiring LightSquared's debt illegally and in secret to try and hijack the company's reorganization.
Bloomberg reported that a special committee of LightSquared's board said it expected junior stakeholders, including Harbinger, to object to its own reorganization plan, which would keep the two branches of LightSquared together.
"LightSquared and the special committee have given the junior stakeholders every possible opportunity to gain consensus and finance their own recovery. It simply has not happened," lawyers for the special committee wrote in a court filing.
Last week LightSquared filed a new reorganization plan in which Ergen, LightSquared's largest secured lender, would receive debt and nonvoting shares because of his $900 million debt claim, if he votes to accept the proposal. Meanwhile, according to the Wall Street Journal, a group of investors holding LightSquared's bank debt would get the company's voting shares, although others could buy that equity from them at an auction. The LightSquared plan would cut Harbinger out of the reorganization.
- see this Bloomberg article
- see this Leveraged Loan article
- see this NY Post article
- see this WSJ article (sub. req.)
- see this Bloomberg article
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