DISH Network Corp (NASDAQ:DISH) is facing shareholder wrath over its handling of a takeover bid offer for LightSquared Inc.
Shareholders argue that two directors appointed by DISH Network Corp (NASDAQ:DISH) to a committee to evaluate the merits of a lawsuit have close ties with Chairman Charlie Ergen.
Charlie Ergen’s $2 billion bid for LightSquared
Last year, LightSquared Inc. filed for bankruptcy, 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.
Later, DISH Network Corp (NASDAQ:DISH)’s Charlie Ergen made a $2 billion bid for the bankrupt wireless provider LightSquared, a move that could pit Ergen against fellow billionaire and LightSquared financier Philip Falcone.
Ergen has quietly amassed more than half of LightSquared’s $1.7 billion of secured loans through hedge fund firm Sound Point. The satellite mogul used the hedge fund to make the purchases specifically because of the loan limits on strategic buyers.
Dish Network Corp formed a committee last month after a shareholder, the Jacksonville, Fla., Police and Fire Pension Fund, sued the company and its directors over their handling of the bid.
Shareholders in a court document filed last Friday sued DISH Network Corp (NASDAQ:DISH) for its handling of an offer for LightSquared Inc. claiming two directors appointed by Dish to a committee to evaluate the merits of that lawsuits have close ties to Mr. Ergen and the company.
In its filing, the shareholders contested that director Tom Ortolf has a daughter who works at DISH Network Corp (NASDAQ:DISH) while another director, George Brokaw, chose Mr. Ergen’s wife, Cantey Ergen to be the godmother of his son. The shareholders alleged those relationships could compromise their independence in the matter.
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The committee refused to provide information the fund requested and wouldn’t appoint the director it recommended.
Sharon Terlep of The Wall Street Journal feels DISH Network Corp (NASDAQ:DISH)’s takeover bid for LightSquared could be personally lucrative for Dish chairman Charlie Ergen.
Last month, a lender group, which holds $1.4 billion of $1.7 billion in debt of LightSquared’s LP unit proposed that LightSquared form an independent committee to run the auction or let the lender group or an outside trustee do it.