LightSquared Inc., the wireless broadband company said to have received an offer from Dish Network Corp. Chairman Charlie Ergen, won permission to hire Jefferies Group LLC to line up financing to exit bankruptcy.
U.S. Bankruptcy Judge Shelley Chapman in Manhattan approved Jefferies’s hiring today. She also raised questions about the identities of LightSquared’s debt owners after lawyers expressed concerns that a committee of lenders may no longer be the company’s largest debt holder.
"I have this desire to know actually who I’m talking to," Chapman said. Lawyers told her that as far as they know, documents giving details about the owners of the company’s debt were still accurate.
Rachel Strickland, a lawyer for Ergen’s SP Special Opportunities and a partner at Willkie Farr & Gallagher LLP, said her client still holds less LightSquared debt than an ad hoc lender group, based on trades that have been completed. The ad hoc group previously reported owning $1.1 billion of secured debt in the wireless company’s LP unit.
Ergen has offered to buy spectrum currently licensed to Reston, Virginia-based LightSquared for $2 billion, Bloomberg News reported last month, citing people familiar with the offer. Dish, based in Englewood, Colorado, in April made a bid to acquire mobile-phone carrier Sprint Nextel Corp. for $25.5 billion.
LightSquared, which is controlled by Philip A. Falcone’s Harbinger Capital Partners LLC, said in court papers that it and Jefferies are "highly confident" their agreement will lead to financing that is worth more than the pre-bankruptcy debt owed to the LP unit’s lenders and bring the company a step closer to paying creditors and reorganizing.
"We believe we need to do this now," Matthew Barr, a lawyer for LightSquared, told Chapman today, saying the money raised will become a cornerstone of its Chapter 11 plan.
LightSquared said Harbinger will pay fees of as much as $80 million under the agreement. LightSquared separately won permission to file under seal a letter which would otherwise disclose how much New York-based Jefferies would charge and how much may be raised.
LightSquared, backed by Harbinger, filed for bankruptcy in May 2012 listing assets of $4.48 billion and debt of $2.29 billion.
Harbinger acquired LightSquared in March 2010 for $1.05 billion in cash and controls about 96 percent of its stock. The Federal Communications Commission had blocked LightSquared’s plan to use the Global Positioning System spectrum after GPS-device makers and users --including the U.S. military and commercial airlines -- said it might interfere with their navigation.
The LP lender group had at the beginning of the case called Falcone’s strategies for the company risky and objected to his having control. The company in October won more time to file a bankruptcy plan after it came up with a new regulatory strategy and lenders withdrew opposition.
The case is In re LightSquared Inc., 12-12080, U.S. Bankruptcy Court, Southern District of New York (Manhattan).