* Beal Bank trying to sell $150 million LightSquared tranche
* Beal seeking bids as Phil Falcone mulls bankruptcy
By Matthew Goldstein
NEW YORK, April 12 The fate of hedge fund
manager Philip Falcone's upstart telecom may hang in the
balance, but some distressed investors are still wheeling and
dealing in LightSquared debt.
A financial institution controlled by billionaire investor
Andrew Beal is trying to sell $150 million in bank debt that
LightSquared has issued to raise money for its proposed
nationwide wireless network, say three traders familiar with the
Plano, Texas-based Beal Bank began seeking bids this week
for the debt, which last traded in the secondary market at
around 50 cents on the dollar. Traders say it does not appear
the $150 million block of bank debt has been sold.
A spokesman for Beal declined to comment. Falcone did not
respond to an email seeking comment.
The move by Beal to sell the debt comes a week after
Falcone, whose $3.8 billion Harbinger Capital Partners is
LightSquared's primary owner, said he is seriously considering a
voluntary bankruptcy for the money-losing Reston, Virginia-based
Falcone made his comments as some of LightSquared's
creditors consider whether to declare the telecom to be in
default on some $1.5 billion in bank debt and move to push the
company into bankruptcy themselves.
LightSquared is teetering on the verge of bankruptcy after
the Federal Communications Commission in February withdrew a
conditional waiver that would allow the telecom to build out its
network. The FCC withdrew the waiver after tests revealed that
LightSquared's planned network would interfere with crucial
satellite systems used for critical services such as aviation
safety and the U.S. Department of Defense.
The FCC action came after bitter protests from a trade group
representing companies that rely on Global Positioning Systems,
which operate in a spectrum close to LightSquared.
Hedge funds Fortress Investment Group, Knighthead
Capital Management and Redwood Capital Management, which also
own some of LightSquared's bank debt, recently sent a letter to
the FCC asking them to reconsider the February decision.
Beal acquired its portion of LightSquared's bank debt in the
secondary market at the same time activist investor Carl Icahn
and David Tepper's Appaloosa Management were buying LightSquared
debt. Over the years, Icahn and Beal have teamed up together in
chasing distressed properties.
Icahn did not return a telephone call seeking comment. An
official with Tepper's firm also did not respond to a request
for a comment.
LightSquared sold the bank debt to raise money for the
construction of its high-speed wireless network. Falcone's hedge
fund has contributed roughly $3 billion to the company and it
owns all but a tiny sliver of LightSquared's equity.
The sources familiar with the situation say Beal, Icahn and
Tepper bought some of the $300 million in LightSquared bank debt
sold last year by hedge fund Farallon Capital Management.