Dish Network (NASDAQ: DISH) Chairman Charlie Ergen could make hundreds of millions of dollars in personal profit if his bid to acquire LightSquared's spectrum assets in bankruptcy succeeds, according to a Wall Street Journal report. The report, citing court records and unnamed sources familiar with the situation, notes that Ergen, through an entity called SP Special Opportunities, purchased LightSquared's bank debt at a discounted rate and could profit if Dish succeeds in buying LightSquared. SP Special Opportunities is wholly-owned by Ergen and Ergen accumulated LightSquared debt worth more than $1 billion, but the report said some trades for the debt were around 50 or 60 cents on the dollar, with other purchases made for higher prices. Sound Point Capital Management, a hedge fund run by Stephen Ketchum, a former banker with ties to Ergen, made the trades on behalf of SP Special Opportunities. Dish's $2.2 billion bid for LightSquared would repay lenders owed roughly $1.7 billion fully with interest.
According to the report, Dish formed a special committee of the company's board earlier this year to decide whether to make a bid for LightSquared, and the special committee comprised independent directors and excluded Ergen. The special committee wanted to ensure an offer would be an arm's length transaction given Ergen's positions in LightSquared debt, and Dish's full board approved a decision to submit a reorganization plan for LightSquared alongside other lenders. During that process, the special committee also received a "fairness opinion" from a financial advisory firm, according to a regulatory filing. A group of LightSquared's lenders filed a reorganization plan in bankruptcy court last week that would largely follow the lines of Dish's proposed acquisition of LightSquared's spectrum assets. LightSquared is one of the many wireless options that Dish's Ergen has pursued. Dish recently dropped its bids to purchase Sprint (NYSE:S) and Clearwire. Analysts have said Dish may now try to partner with T-Mobile US (NYSE:TMUS). Article (sub. req.)