Bloomberg News

LightSquared Reaches Loan Agreement, Negotiating Cash Use

June 11, 2012

LightSquared Inc. reached an agreement with one group of lenders for a loan and is in talks with other debt holders to use their cash collateral in a bid to avoid liquidation, a lawyer for the company said.

LightSquared is seeking permission from a group that owns $1.1 billion of debt in its so-called LP unit to use $190 million in collateral, the lawyer, Matthew Barr, told U.S. Bankruptcy Judge Shelley Chapman in Manhattan today. Chapman adjourned the hearing until tomorrow to allow the parties more time to negotiate after saying a productive meeting took place today during a court break.

The company, backed by Philip Falcone, has been in a dispute with the debt-holders group since the outset of its Chapter 11 case.

“We’re certainly not intending to shut the debtor down at this point,” Thomas Lauria, a lawyer for the group, told Chapman.

LightSquared has found the LP lenders’ offers so far to be “untenable,” Barr told Chapman. Without permission to use cash, LightSquared “would be forced to terminate its business operations and liquidate its assets,” the maker of wireless broadband technology has said in court papers.

LightSquared separately agreed with lenders to its “Inc.” unit on a so-called debtor-in-possession loan that will allow the company to fund some operations in bankruptcy, Barr said. He said he would give details later in today’s court hearing. After a break for negotiations with the LP lenders, the hearing was adjourned without further appearance from Barr.

Appaloosa, Fortress

The LP lender group includes Capital Research & Management Co., Appaloosa Management LP and Fortress Investment Group LLC. (FIG:US) U.S. Bank NA is an agent to lenders to its so-called Inc. unit, which owes $322.3 million.

The lender group had said the company could use its cash only under certain restrictions, without which there isn’t enough evidence that the company won’t waste its assets, because LightSquared still needs approval from the Federal Communications Commission to move forward with its plan to offer wireless broadband and have a viable business.

Separately today, Chapman approved the company’s request to hire advisers including Milbank, Tweed, Hadley & McCloy LLP as the company’s main bankruptcy counsel and Alvarez & Marsal Inc. as a financial adviser.

GPS Networks

LightSquared filed for bankruptcy May 14, saying it would seek a resolution with U.S. regulators who thwarted the company’s plan to deliver high-speed wireless to as many as 260 million people over concerns that it interferes with GPS networks.

LightSquared, based in Reston, Virginia, listed assets of $4.48 billion and debt of $2.29 billion as of Feb. 29 in its Chapter 11 filing. The filing followed intense negotiations with creditors, who had requested that Falcone step aside.

The case is In re LightSquared Inc., 12-12080, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Tiffany Kary in New York at tkary@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net


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