The LightSquared at the end of the tunnel: wireless start-up finally exits bankruptcy

30 Mar 2015

Ill-fated open access 4G start-up LightSquared secured court permission to exit bankruptcy late last week, Bloomberg reports, ending a three-year battle for control of the company’s future. The ruling followed a trial in which hedge fund investors and Charlie Ergen – boss of satellite TV giant-turned-aspirant wireless player – argued over the value of the airwaves, which are estimated to be worth around USD4.5 billion. The judge’s decision noted that ‘more than a dozen plans have been announced or proposed’ over the course of the bankruptcy, involving ‘countless hours of human capital’.

At one point, in late-2013, Ergen was the only bidder for the company’s assets, offering USD2.22 billion, although he later withdrew the offer. The new plan, as approved by the court, will give Centerbridge Capital Partners, Fortress Investment Group and a unit of JPMorgan Chase & Co. control of most of the company, with LightSquared founder Philip Falcone’s Harbinger Capital Partners taking a minority stake of the new equity.

Ergen will be repaid in full and in cash after his fund agreed to withdraw its objection to the plan. As the legal tussle unfolded, the DISH boss was said to have quietly amassed more than half of LightSquared’s USD1.7 billion worth of secured loans, prompting Harbinger to sue him for using ‘improper tactics’ to acquire the airwaves at a below-market price.

As previously reported by TeleGeography’s CommsUpdate, in February 2012 the Federal Communications Commission (FCC) declared that LightSquared’s use of non-traditional frequencies in the 1.4GHz and 1.6GHz bands interfered with GPS satellite navigation devices and aircraft flight safety equipment. Subsequent months saw the stricken company beset with myriad financial and legal problems, before being forced into bankruptcy in May 2012.

Worryingly, as recently as 17 March this year, a government lawyer told Chapman that the FCC still cannot predict whether it will approve use of the spectrum.