LightSquared taking the trip toward bankruptcy

LightSquared taking the trip toward bankruptcy
According to a report early Monday in the Wall Street Journal, potential third party carrier LightSquared is preparing bankruptcy papers. The company, which lost a major contract with Sprint, was unable to secure government approval to operate its LTE network as testing showed that its technology would interfere with nearby GPS systems including those belonging to the military. The company, run by hedge-fund manager Philip Falcone, met with creditors late last week, but they could not come to an agreement to prevent LightSquared from defaulting on its debt. While LightSquared and its lenders have until 5pm Monday to reach an agreement, both sides are said to be so far apart that it makes sense for the company to get bankruptcy papers ready. A filing could take place later Monday.

LightSquared had previously violated the terms of its debt and received two waivers in an attempt to work things out. A third waiver is not expected to be offered. This is actually good news for vulture investors like Carl Icahn who purchased LightSquared debt for pennies on the dollar. Back in January, LightSquared debt was trading at 40 cents on the dollar and is significantly lower now. Speculation is that Icahn has added to his holdings by buying the LightSquared position belonging to Dish Network's Charlie Ergen. But investors like Icahn aren't looking for the quick buck. A bankruptcy filing would give current LightSquared management several months of exclusivity to come up with a solution to exit bankruptcy. The protection could be extended by a bankruptcy judge to 18 months. Once the company loses its exclusivity to file a plan, the vulture investors can then come up with their own plan for the company to exit bankruptcy. The court would make the ultimate decision of which plan to follow.

Falcone says LightSquared's lenders are asking for too much and are trying to get the company to agree to conditions they know the company can't meet. He claims to be looking for a middle ground. The lenders want an independent board that doesn't include Mr. Falcone to run LightSquared and while the investor agreed to that, he refuses to sign off on the lender's request to personally hold Falcone responsible for a bankruptcy filing under certain conditions. The hedge-fund manager has billions of his and his firm's money invested in LightSquared. The lenders currently hold $800 million in senior debt, about half of the company's total of such debt. That gives the lenders the ability to block any restructuring.

source: WSJ



1. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

And what exactly does Lightsquared have to re-organize its operations around?

2. thelegend6657 unregistered

Can't just light squared just get a new spectrum ? This is so sad

3. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

With what? No sales. Credibility with the bond markets is pretty much gone. Same for equity markets, unless Falcone wants to write a check. Again, the question of what exactly is Lightsuared going to re-organize its operations around?


Posts: 1459; Member since: Mar 09, 2010

This is about money and nothing less. The vultures want to take his money and his families money as it states in the story. Bankruptcy protects them but no the lenders want to try to ruin him completely. Its a joke, and I bet that is why he was blocked. The smell of money by sharks to let it fail and take the money. I bet the FCC could have done something to make this work had it been more lucrative for their own pockets. He has submitted claims that they have ulterior motives because they have their hands in the pot too. I bet they think by blocking him that they could use the GPS inference as a legal way of taking his "cheddar" legally. This deal will not be in the best interest of the big 2 wireless companies I bet! This smells fishy to me for sure

5. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

@QWIK - when did it become the FCC's charter to figure out a solution to LightSquared's problem(s)? Bankers want thir money back. LightSquared is in breach/violation of the loan agreement, and the bankers want to get as much of their money back as they can get (they won't get all of it). Falcone will do just fine. He will go long on crude oil futures or short the national bonds of Greece, and LightSquared will be but a distant memory. That is how the 1% live.


Posts: 1459; Member since: Mar 09, 2010

Doug it's not the FCC's problem to figure any thing out. However there is definitely something amiss from all the stories that I have read. There could be forces that want to see Light Square fail because it opens up fairness in spectrum distribution in the industry to others other than Verizon and AT&T. The fact that Light Squared contends that the people that reject his approval has monetary gain for doing this suggest the issue may be deeper than just an inference issue. If his service will siphon income from the services that I am fully invested in it may not be in my best interest to approve such a venture if it threatens mine. I feel this could probably be the case here and investors getting money back is a small part of that. Carl Icahn didn't buy junk for nothing ok! Icahn buying this stock for pennies shows that something is up. Sharks buying a failed venture for pennies on the dollar get a grip something is up! I wouldn't be surprised if Icahn has dreams of heading Light Squared with out Falcone with a vision of his own design. Check out WAMU's demise, and Jamie Dimon as a reference for what could have happened here! Snakes in the grass is the proper analogy here in this story I think!

7. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

WAMU got merged into Chase because WAMU ran out of cash from loans it wrote earlier turning into non-performing loans. FDIC saved the depositors. Fast forward to the present, and things are not much different for LightSquared - they have hit a wall on a business strategy that was a non-starter once the GPS interference issue surfaced. LightSquared was not able to propose a reasonable solution, and their business model is going nowhere fast. Icahn is a speculator just like Falcone. This time, they (Icahn and Falcone) are just on opposite ends of the same transaction. But that isn't evidence of a conspiracy by Icahn. Falcone set the strategy, now he has to live with the consequences of his decision(s).


Posts: 1459; Member since: Mar 09, 2010

Wrong don't have a clue. Jame in the past wanted Wamu for it's depositors, and Wamu rejected his take over bids. Dimon then aggressively shorted the stock way back in 2005/2006 IIRC to drive Wamu into submission. Sheila Bair allegedly awarded Dimon the stock prematurely, and there still may be law suits about this venture between Dimon, WAMU and the FDIC! I am paraphrasing this from memory so bare with me if my thoughts are a little cloudy. This is all recorded and before you come back telling that I am wrong go research before opening your mouth. You know I will post links if you dare challenge with out facts. 12 ne-question-for-sheila-bair/ cked-off-by-fdic-call-to-jamie-dimon/ l_street/30000843_1_wamu-multiyear-business-plan-r ating-downgrade I decided to post this now before you foolishly reply like you have above with misconceived facts.... there's proof of what I say in these links. If stocks and money are involved things never are as cut and dry as you think. Man some of you are so damn naive, and misinformed. You are correct in saying that things that occurred then are close to what's happening now.

8. maxican16

Posts: 364; Member since: Sep 29, 2011

they obviously don't know how to harness the power of the teseract.

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