DISH Network Corp (NASDAQ:DISH) did not perceive the wireless spectrum assets of LightSquared as an attractive acquisition by the end of 2011, said Charles Ergen, chairman of the satellite television service provider, during a hearing at the U.S. Bancruptcy Court in Manhattan today.
Ergen testified at Bancruptcy Court
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In his testimony, Ergen also said that despite the perception of DISH Network Corp (NASDAQ:DISH), he personally remained interested investing in LightSquared. Ergen is facing allegations that he secretly acquired $1 billion worth of Lightsquared debt to control the restructuring of the wireless broadband network company and use its wireless spectrum to expand Dish Network’s business into wireless.
Ergen explained that he invested in LightSquared because he saw an opportunity for himself and not for DISH Network Corp (NASDAQ:DISH). He said, “From an investment point of view, LightSquared still had valuable spectrum. While it might not fit necessarily with Dish, that spectrum could fit with different companies.”
Philip Falcone, CEO of Harbinger Capital Partners and majority owner of LightSquared filed a lawsuit against Ergen and DISH Network Corp (NASDAQ:DISH) to prevent the $1 billion claim. The wireless broadband network company argued that Ergen blocked efforts to reveal the identity of the person or entity behind the debt purchases and knew that the credit agreement prohibited competitors to acquire its debt.
On the other hand, the lawyers representing Ergen argued that personally, he has the right to purchase debt. According to them, Ergen did not want to reveal his identity because it could drive the price higher.
Last week, Jason Kiser, treasurer of DISH Network Corp (NASDAQ:DISH) who provided advise regarding the debt purchases, testified that he did not contemplate whether he was doing his responsibility for the company or for Ergen when he first reviewed the proposed investment in 2011. According to him, when lawyers told him that competing companies are not allowed to buy the debt, he was acting in behalf of Ergen.
On the other hand, LightSquared said Kiser acted on behalf of DISH Network Corp (NASDAQ:DISH) when he advised Ergen to use his investment vehicle to make the investment.
Meanwhile, Egen emphasized that he learned from Kiser that DISH Network Corp (NASDAQ:DISH) was prohibited to invest in LightSquared’s debt. He added that Kiser always helped him with his personal investments without asking for compensation.
“He likes being in the action. When he’s doing stuff for me personally, he gets to spend time with me and I think he likes that,” said Ergen.
Dish terminates $2.2 billion offer
Last week, DISH Network Corp (NASDAQ:DISH) and Ergen’s investment vehicle officially terminated its $2.2 billion offer to acquire the spectrum assets of LightSquared due to technical issues.
Today, an adhoc lender group that originally supported Ergen’s deal proposed an alternative to proceed with the reorganization of LightSquared. The new proposal is worth $1.2 billion in cash, to be paid to LightSquared’s group of lenders and $10 million to unsecured creditors.
LightSquared submitted its own bankruptcy exit plan, which includes $1.25 billion in new equity and $2.85 million loans from Fortress Investment Group LLC (NYSE:FIG) and Melody Capital Advisors.
LightSquared filed for bankruptcy protection when the Federal Communication Commission (FCC) rejected its proposal to use its wireless spectrum to build a 4G LTE network in 2002 due to concerns that it would interfere with GPS navigation.