A group of lenders contest LightSquared Inc’s proposed format for an auction of its wireless-spectrum assets.
Tiffany Kary of Bloomberg feels the lenders’ action would foil a $2.2 billion offer from a unit of Charlie Ergen’s DISH Network Corp (NASDAQ:DISH).
Dish’s $2 billion bid
As reported earlier, LightSquared filed for bankruptcy in 2012, saying it will seek to resolve the concerns of U.S. regulators who thwarted the company’s plan to deliver high-speed wireless to as many as 260 million people.
Subsequently, DISH Network Corp (NASDAQ:DISH)’s Charlie Ergen made a $2 billion bid for bankrupt wireless provider LightSquared, a move that could pit Ergen against fellow billionaire and LightSquared financier Philip Falcone.
LightSquared’s proposed move
LightSquared, run by Philip Falcone, now faces a fight over how to sell its assets after the group of lenders filed an objection in Manhattan bankruptcy court.
The bone of contention between the lenders and LightSquared is the wireless provider’s proposal to let a committee that includes Falcone’s investment firm Harbinger Capital Partners LLC choose the winning bid. The lenders oppose the move as they feel Harbinger opposes any sale of LightSquared’s assets.
The lender group, which holds $1.4 billion of $1.7 billion in debt of LightSquared’s LP unit, has proposed that LightSquared form an independent committee to run the auction or let the lender group or an outside trustee do it. The dispute is coming up for a hearing on September 24.
As reported earlier, Falcone was reportedly mulling a re-organization plan that would seek to compensate all creditors except Charlie Ergen of DISH Network Corp (NASDAQ:DISH).
LightSquared lost $56.7 million in August
As on February 29, LightSquared based in Reston, Virginia, listed assets of $4.8 billion and debt of $2.29 billion.
Recently, LightSquared posted a $56.7 million loss in August, bringing the company’s losses to $879.1 million since its May 2012 bankruptcy filing. In a monthly operating report filed Monday with U.S. Bankruptcy Court in Manhattan, the wireless satellite company again pointed out much of the loss is due to interest payments on its debts.
