This Day On The Street
Continue to site
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

LightSquared's Prospects Dim

NEW YORK ( The Deal) -- A group of LightSquared secured lenders is trying to block Charlie Ergen's exit from a $2.2 billion asset purchase agreement.

The creditors called Dish Network's (DISH - Get Report) attempt to terminate its purchase of spectrum and other assets "a desperate attempt to evade the clear and unambiguous language" of a court order, in pleadings filed Monday.

The Philip Falcone-backed wireless telecom group is low on cash, and scrambling to fund its exit from Chapter 11 protection. While LightSquared has lined up limited debtor-in-possession financing to pay for its reorganization, it has received news from regulators that would complicate its reorganization.

Dish agreed to buy spectrum and other assets of the debtor's LightSquared LP unit in July. Creditors of LightSquared LP proposed a plan to reorganize the unit based on proceeds from the deal.

Must Read: Valuing a Men's Wearhouse-Jos. A. Bank Merger

Ergen's satellite TV company said in recent weeks that it will terminate the purchase because the creditors did not meet deadlines, such as obtaining court approval for their plan by Jan. 7.

The creditors argue that Judge Shelley Chapman's October order on auction rules locks in Dish until Feb. 15. LightSquared called off the auction in late 2013, when a special committee did not find the bids acceptable and chose to pursue other options.

The dispute comes as LightSquared is "essentially out of cash and teetering on the verge of administrative insolvency," the creditors said.

The telecom is attempting to finance a reorganization plan that would keep the company intact. Fortress Investment Group LLC, JPMorgan Securities LLC, Melody Capital Advisors LLC and Falcone's Harbinger Capital Partners would back the plan.

The Federal Communications Commission filed a notice with the bankruptcy court Friday stating that it may not be able to rule on LightSquared's standalone plan by the end of 2014, which is a condition of the Fortress-backed plan.

"We don't see how the latest Fortress proposal gets done with this new development," Marci Ryvicker of Wells Fargo Securities LLC wrote in a Tuesday report. Aside from the timing, LightSquared's plan would requite input from other federal agencies.

"We ultimately believe Charlie will end up with the Lightsquared assets - how this actually happens is the big unknown," Ryvicker wrote.

Judge Chapman is considering the plans from the debtor, the LightSquared LP creditors and creditor Mast Capital Management LLC.

She is also hearing a suit that Harbinger and LightSquared filed against Ergen, arguing that the satellite TV mogul improperly purchased debt of the bankrupt telecom and imperiled its reorganization.

LightSquared estimates that the plan confirmation hearing will last until February, if not longer.

A group of the LightSquared LP creditors agreed to provide the company with a debtor-in-possession loan, pleadings filed Saturday state.

Capital Research Management Co., Cyrus Capital Partners LP, Fir Tree Partners and Intermarket Corp. would loan the debtor $33 million, carrying annual interest of 15%, which can be paid in kind.

The loan matures on April 15, 2014, but could come due earlier under some circumstances. It would mature on the funding date of the LightSquared LP plan, if the creditors succeed. If the debtor confirm's it's standalone plan, the debtor-possession loan would mature 15 days after the order.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr 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

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DISH $63.07 0.00%
AAPL $117.81 0.00%
FB $105.45 0.00%
GOOG $750.26 0.00%
TSLA $231.61 0.00%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs