LightSquared fails to make payment on $56 million loan, lays off 45% of its employees
Last week, the FCC revoked a temporary approval it had given LightSquared saying that the company's network interferes with the GPS receivers used by airlines and the military. Trying to make that temporary approval permanent, the company spent $2.5 million on lobbyists vs. $265,000 the year before.
Despite what appears to be dire straits for LightSquared, its main backer, hedge fund manager Philip Falcone, says bankruptcy is not an option at the moment. However, it might be a consideration for those investors who are in Falcone's $4 billion Harbinger Capital Partners Fund. The fund has 60% of its assets in LightSquared and lost 47% last year after the value of its investments in LightSquared equity was marked to market. Falcone made his fortune by shorting sub-prime mortgages and once managed $26 billion. He has much of his personal wealth invested in the network wholesaler, a bet that is not looking good at the moment.
Weeks ago, 80's takeover artist Carl Icahn was said to have invested in some of LightSquared's debt at bargain prices, along with other distressed debt investors. For those guys, the first step to taking control of LightSquared would be to see the company fall into bankruptcy where they can then wield their power in a reorganization thanks to their position as debt holders.
1. Carlitos (Posts: 333; Member since: 23 Oct 2011)
This is really going to suck for Sprint. There aggressive LTE roll out seems much less likely now.
2. theBankRobber (Posts: 647; Member since: 22 Sep 2011)
Sprint always get caught up in these kinds of problems, Wimax and now LTE. Man just when you think the so called company that has the most spectrum would be able to come back now gets its head rammed up its own ass. I hope the future starts to look bright because I hate for them to raising prices again.
8. downphoenix (Posts: 2358; Member since: 19 Jun 2010)
Telling you. Lobbyists for AT&T and Verizon are behind these events. Especially since Sprint didnt back the T-mobile buyout. Sprint isnt playing ball with them so they will do what it takes to crush them.
3. -box- (Posts: 3822; Member since: 04 Jan 2012)
Sprint's bungled its network assets before, this is nothing new, and fully expected. I've been telling everyone who is considering sprint to stay away because of the uncertain future of their networks. WiMAX is already set to shut down in the next few years, the iDen network is toast, they're planning on revamping their 3G network for better structure penetration. In short, none of their currently-available phones will work in the near future if they follow through with their plans, and they really don't have the money to do much about it unless they sell their spectrum, instead of renting it to Boost and Cricket and such. Personally, I'm not against that happening. Their unlimited data plans are marketing BS due to [relatively] slow data speeds, they took Nextel behind the shed and shot it when it was (and could have continued to have been) the biggest jewel in their tarnished crown. Let U.S. Cellular take their place, they seem like a nicer company anyway. Maybe USC and T-Mobile can split the remainder between them, USC for the rural areas and smaller markets, T-Mobile for the urban and sub-urban.
Bummer about LightSquared. They seemed like they had some neat plans, just not the technology to make it work
5. glf752 (Posts: 14; Member since: 05 Jan 2012)
I have been with all of the carriers and sprint to me is the best, I stay in Dallas, I have had verizon LTE, nice until you get capped,
I have a AT&T LTE for phone work Nice until you get capped, Had tmobile for my son nice until he gets capped opps no more facebook...but my personal phone is sprint 4G wimax has very competitive speeds...and guess what i get it at my house on the way to work, i watch movies, download songs, watch youtube, tether it so i can use it on the go for my work laptop (great speed no caps) point blank...Sprint is trying to come up and they are going about it the cheap way but they are not fools remember they are the majority owner of Clearwires.....watch the video then make your decisionshttp://www.clearwire.com/compa
6. glf752 (Posts: 14; Member since: 05 Jan 2012)
also just so you know i work for AT&T on there LTE Network so I know what i'm talking about.
7. Droid_X_Doug (Posts: 5871; Member since: 22 Dec 2010)
What is LightSquared going to do to stay out of BK? 3 creditors (where the debtor has 12 or more creditors) can put it into involuntary BK.