Dish Network Corp (NASDAQ:DISH), the satellite TV service provider headed by Charlie Ergen, officially terminated its $2.2 billion deal to acquire the wireless spectrum assets of LightSquared, the bankrupt wireless broadband network company controlled by Philip Falcone of Harbinger Capital Partners.
According to Reuters, Joshua Sussberg, the lawyer representing the official committee responsible in supervising any potential auction for LightSquared confirmed to the bankruptcy court that Dish Network Corp (NASDAQ:DISH) terminated its bid.
These Are John Buckingham’s Stock Picks For 2021
The economy remains in distress, although there are signs of recovery underway. John Buckingham of Kovitz, editor of The Prudent Speculator newsletter, has found that value stocks typically outperform coming out of economic downturns. Thus, he argues that this is an excellent time to be a value investor. Q4 2020 hedge fund letters, conferences and Read More
Deal fell apart due to technical issue
Yesterday, the lawyer representing a group of lenders for LightSquared informed U.S. Bankruptcy Judge Shelley Chapman that the proposed deal of the satellite TV service provider is falling apart after Ergen’s investment vehicle, LBAC raised a technical issue. Atty. Thomas Lauria told the judge that the concern was serious and if not resolved it would “impair utility of LightSquared’s spectrum.”
The lawyer for Ergen’s group, Atty. Rachel Strickland warned yesterday that LBAC might exit the deal because of the breakdown in communication. The lenders of LightSquared had been negotiating with LBAC and Dish Network Corp (NASDAQ:DISH) regarding the technical issue.
Judge Chapman is scheduled to consider the approval of Dish Network’s $2.2 billion bid and a plan to sell a smaller portion of LightSquared’s spectrum to Mast Capital and U.S. Bancorp (NYSE:USB) later this month.
Lightsquared’s bankruptcy exit plan
Harbinger Capital Partners, the majority owner of LightSquared and its lenders opposed Dish Network’s deal. The company recently submitted a new bankruptcy exit plan showing a new equity and loan worth $4 billion backed by Fortress Investment Group LLC (NYSE:FIG) and Melody Capital Advisors. The investment management firms agreed to invest $1.25 billion in new equity and a $285 million loan.
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. The agency was concerned that it would interfere with GPS navigation.
Dish Network Corp (NASDAQ:DISH) spent billions of dollars purchasing wireless spectrum. Its plan is to build a broadband service to deliver video wirelessly. However, the company is experiencing difficulty in utilizing the spectrum.
The stock price of the satellite TV service provider is trading at about $56.01 per share, down by more than 3% following the report of its withdrawal from the spectrum deal.