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LightSquared Gets Loan Offers From Fortress and Ergen Entity (1)

January 27, 2014

Philip Falcone’s LightSquared Inc., seeking to reorganize in bankruptcy, received loan offers from a fund owned by Fortress Investment Group LLC (FIG:US) and an entity linked to the wireless-network company’s one-time suitor, Dish Network Corp. Chairman Charlie Ergen.

The loan proposals are superior to one from a group of LightSquared’s lenders, Fortress Credit Investments and Ergen’s SP Special Opportunities LLC said in papers filed Jan. 24 in U.S. Bankruptcy Court in Manhattan. Their arguments are to be considered at a Jan. 31 hearing.

LightSquared said Jan. 18 that it seeks to take a $33 million loan from the ad hoc lender group, whose members would get higher priority rights to collect on debts.

Fortress, which owns some of LightSquared’s pre-bankruptcy debt, said its revised loan offer carries the lowest of the three interest rates, at a maximum of Libor plus 8 percent a year. Libor, the London interbank offered rate, is the rate at which banks say they can borrow from each other. Libor rates are currently less than 1 percent.

Special Opportunities, or SPSO, is offering a loan with a 12 percent annual rate while the lender group is proposing 15 percent a year, according to court documents.

Last week, a judge overseeing the bankruptcy case said a Dish (DISH:US) unit can probably walk away from its proposed purchase of LightSquared. The unit, L-Band Acquisition LLC, sought to withdraw a $2.22 billion buyout bid.

‘Irrevocable’ Bid

The ad hoc lender group, whose members hold most of the debt in the LightSquared LP unit, has argued the bid was “irrevocable.”

SPSO built a stake in LightSquared’s debt before L-Band made its bid. LightSquared and Falcone’s investment fund Harbinger Capital Partners LLC claimed in a lawsuit that Ergen improperly bought the debt to assist L-Band in its takeover attempt.

LightSquared, based in Reston, Virginia, filed for bankruptcy in May 2012 after the Federal Communications Commission blocked its initial proposal to use wireless spectrum, saying it might interfere with global-positioning system navigation equipment.

Complicating the company’s bid to exit bankruptcy, the FCC has said it may not approve LightSquared’s latest plan by the end of the year.

The case is In re LightSquared Inc., 12-bk-12080, U.S. Bankruptcy Court, Southern District of New York (1071L:US) (Manhattan).

To contact the reporter on this story: Tiffany Kary in New York at

To contact the editor responsible for this story: Michael Hytha at

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