Phil Falcone’s Harbinger Capital Partners and LightSquared urged a bankruptcy judge to reject a takeover effort by DISH Network Corp (NASDAQ:DISH).
Harbinger and LightSquared said the Dish deal is inferior to LightSquared’s proposal to reorganize on its own.
Dish bid undervalues LightSquared’s assets
In May 2013, DISH Network Corp (NASDAQ:DISH) offered $2.22 billion to acquire 40 MHz of wireless spectrum held by LightSquared, which is currently bankrupt. However, Harbinger Capital Partners, the principal owner of LightSquared, rejected this bid stating that DISH has resorted to fraudulent means to enter the bidding process. In October 2013, a Manhattan bankruptcy judge approved DISH’s bid and has set an auction date on November 25, 2013.
In a court filing last Thursday, Harbinger said the Dish bid undervalues LightSquared’s assets, laying out its opposition to the takeover bid ahead of a hearing scheduled for next Thursday in the U.S. Bankruptcy Court in Manhattan. In a separate filing, LightSquared also called for the rejection of the Dish plan.
Nick Brown of Reuters points out that those filings are the latest salvoes in a fierce battle for LightSquared’s wireless spectrum.
Standalone restructuring plan
Recently, the U.S. Bankruptcy Court in Manhattan has allowed LightSquared Inc. to send a standalone bankruptcy plan to creditors for vote. This bankruptcy exit plan has been supported by Fortress Investment Group LLC (NYSE:FIG), JPMorgan Chase & Co. (NYSE:JPM) and Medley Capital Corp (NYSE:MCC).
The standalone plan would facilitate LightSquared to receive $2.75 billion in fresh loans and at least $1.25 billion in equity investment from the private equity firms, including JPMorgan Chase & Co. (NYSE:JPM). However, this plan is contingent on LightSquared obtaining certain regulatory approvals, while DISH Network Corp (NASDAQ:DISH)’s competing takeover bid is not.
Dish has said that its purchase isn’t contingent on obtaining the Federal Communications Commission approvals that LightSquared needs, since it won’t be using the spectrum for the same purposes.
All the plans would pay off the lender group holding nearly $2 billion in LightSquared bank debt.
LightSquared filed for bankruptcy protection in May 2012 after federal regulators refused to clear the company’s network plans, which they said could interfere with global-positioning systems.
The DISH Network Corp (NASDAQ:DISH) bid, made last year, caused LightSquared to eventually consider an auction of the assets, although it cancelled the auction at the last minute and soon after presented its latest restructuring proposal.
LightSquared’s fate should be determined by Judge Chapman’s decisions over the next month.