This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Falcone's LightSquared Roams Into Bankruptcy

Stocks in this article: S CLWR

NEW YORK ( TheStreet) -- Philip Falcone-run hedge fund Harbinger Capital Management has put its multi-billion dollar 4G wireless investment LightSquared into bankruptcy.

After crippling regulatory setbacks and multiple extensions with its lenders, LightSquared, a high-speed wireless service that was planned to provide connectivity to 260 million users, was unable to continue negotiating a recovery strategy and has filed for Chapter 11 bankruptcy, a move that will likely wipe out most of Harbinger's near-$3 billion investment.

LightSquared listed more than $1 billion in assets and debt in its bankruptcy filing. Earlier on Monday, The Wall Street Journal and Reuters reported that a bankruptcy filing was imminent after negotiations with lenders broke off. While Carl Icahn was the most vocal lender calling for a bankruptcy, reports indicate that the activist investor has dumped his LightSquared stake and won't be a part of the bankruptcy process.





For Falcone, a former professional hockey player, LightSquared's bankruptcy is another giant blow to his fund Harbinger Capital Management, which at its peak had roughly $26 billion in assets under management after a successful bet against mortgage bonds prior to the housing bust. The fund's assets have dwindled to just a few billion, the New York Times reports.

Meanwhile, in bankruptcy LightSquared will likely receive greater input from its lenders like hedge fund manager David Tepper, Fortress Investment Group (FIG), Knighthead Capital Management, Redwood Capital Management and investment firm Capital Research. In the company's bankruptcy filing, LightSquared said that Boeing Satellite Systems and Alcatel-Lucent (ALU) are its largest claimants.

Reuters reported earlier in May that Carl Icahn, once a large owner of LightSquared debt, sold a $250 million position in the venture's debt at a moderate profit. Meanwhile, the New York Post reported that Charlie Ergen of Dish Network (DISH) acquired $350 million of the company's debt.

In April, Falcone said that he would consider a bankruptcy, however his focus was on swapping the venture's assets for spectrum controlled by the U.S. Department of Defense. Falcone also told Reuters that a bankruptcy would give LightSquared the chance to fix interference issues with global positioning devices as it tried to revive a build out of a nationwide wireless broadband network on airwaves once used by satellite systems.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs