Harbinger, LightSquared face investor lawsuit, $56M payment

LightSquared and its financial backer Harbinger Capital Partners are continuing to deal with the fallout from regulators' decisions last week not to allow LightSquared to proceed with its plans to launch a wholesale LTE network because of concerns over GPS interference.

On Friday, Harbinger was sued by investors in the fund who claimed that they were misled over the "all in" investment Harbinger made in LightSquared, which has totaled more than $3 billion. Harbinger and its chief Philip Falcone "knew from the outset, or were reckless in failing to know, that LightSquared's technology interfered with GPS systems," according to the suit. The suit claims that because of LightSquared's status now, investors "stand to lose substantially all of the value of their investments." Harbinger declined to comment on the suit.

In a conference call Friday, Falcone said Harbinger would continue to try and keep the LightSquared venture afloat. LightSquared executives have said the company has enough cash to last a few quarters. However, during the call Falcone did not provide any specific details or plans on how the company would deal with the regulatory setbacks. LightSquared is reportedly trying to exchange its 1.6 GHz L-band spectrum licenses for similar ones controlled by the Department of Defense.

"While it is clear that the investment thesis was dead-on, going through the regulatory and political process here has been very disturbing, to say the least," Falcone said, according to the Wall Street Journal. "We are continuing to plow ahead on a number of different fronts. ... We are continuing to evaluate a number of the options we believe we have."

Meanwhile, LightSquared withheld a $56.3 million payment due to satellite operator Inmarsat as part of a spectrum contract the companies have. On Monday Inmarsat issued a notice of default to LightSquared for the payment, and gave it 60 days to make the payment. "Inmarsat and LightSquared have entered into discussions regarding the future of the Cooperation Agreement, but Inmarsat cannot provide any assurance that these discussions will result in any further payments being received from LightSquared," Inmarsat said in a statement.

In its own statement on the matter, LightSquared said Inmarsat is required to fulfill certain unspecified obligations "important to the deployment of LightSquared's 4G-LTE integrated terrestrial and satellite network and protection of their respective customers."

"LightSquared has raised several matters that require resolution before the first phase comes to a close," LightSquared said. "The terms of the agreement allow for additional time to resolve pending questions before phase one is complete and the final payment is due."

For more:
- see this WSJ article (sub. req.)
- see this separate WSJ article (sub. req.)
- see this Bloomberg article
- see this this Reuters article
- see this Inmarsat statement
- see this LightSquared statement

Related Articles:
LightSquared may pursue spectrum swap, claims political foul play
LightSquared's proposed network should be shelved, regulators find
LightSquared presses FCC for stricter GPS device standards
Falcone's Harbinger Capital loses 47% of value due to LightSquared writedown
Sprint extends lifeline to LightSquared until mid-March
FCC comment period keeps LightSquared hopes alive

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