80's Takeover artist Carl Icahn sniffing around LightSquared3
$300 million of LightSquared debt was sold in December by Farallon Capital Management LLC and some of that paper landed in Icahn's portfolio. Other buyers include distressed debt investors David Tepper and Andrew Beal. Icahn is the more famous of the trio, having tried to perform boardroom coups with such companies as Marvel, TWA and others. By buying enough debt, Icahn will have a say in the restructuring of LightSquared, especially if bankruptcy is declared. Debt holders are first in line to receive the fruits from asset sales if a filing is made, while common stockholders are last.
The interest by these investors in the company has some analysts saying that there must be some value to LightSquared. Senior telecom analyst at brokerage CRT Capital Group, Lance Vitanza, says, "The fact that smart money from the likes of David Tepper and Carl Icahn is coming in speaks to the potential value of underlying assets. If you were to resolve the GPS interference issues and eliminate the satellite requirement entirely you would have in excess of $10 billion in value."
Icahn is one of the last of a breed of takeover artists that changed the landscape of Wall Street and corporate boardrooms in the 1980's. A rumor that Icahn was interested in a company could move a stock sharply higher. While the Insider Trading scandal later in the decade took down fellow traders like Ivan Boesky, Icahn somehow managed to escape incarceration and ended up with just a slightly tainted reputation. Luckily for Icahn, others had much more easily proved connections with former Junk Bond King Michael Milken who was tied up in an Insider Trading scandal with Boesky.