| NEW YORK
NEW YORK Oct 9 Creditors of bankrupt broadband
owner LightSquared Inc can vote on competing plans by
LightSquared, its creditors and its primary shareholder,
Harbinger Capital, on how to restructure the company, a judge
ruled on Wednesday.
Judge Shelley Chapman, in U.S. Bankruptcy Court in
Manhattan, said she would sign off on each of the competing
plans after the sides resolved disputes surrounding certain
disclosures in the language of the proposals.
LightSquared, controlled by Phil Falcone's Harbinger, is
trying to stave off an aggressive bid by Dish Network Corp
, owned by Charlie Ergen, for control of its spectrum.
The assets are likely to be auctioned off to the highest bidder,
with Dish having already made a baseline offer for some of the
LightSquared and its lenders have pushed competing proposals
for the parameters of a sale, while Harbinger has put forth a
plan that would restructure LightSquared without a sale.
LightSquared filed for Chapter 11 in May of 2012, after the
Federal Communications Commission tentatively stopped it from
building its network amid concerns in the GPS industry about
potential signal interference from a swath of LightSquared's
Subject to final court approval over the revised language in
the plan outlines, creditors will have the right to vote for any
of the proposals by December 5.
LightSquared's restructuring plan, along with two other
plans proposed by different groups of lenders, contemplates an
auction of the company's assets while LightSquared continues to
pursue FCC approval to develop its suspended spectrum.
Harbinger's proposal does not contemplate a sale, instead
focusing on reaching a regulatory solution with the FCC, which
Harbinger has said would boost the value of the company to $5.65
billion. LightSquared would then repay current outside creditors
in full with proceeds from new financing.
Harbinger wants to retain control of LightSquared, and
auctioning off the company's assets would undermine that effort.
But LightSquared has received bids for its assets, including
Dish's, and with no clear resolution in sight to its regulatory
obstacles, Judge Chapman has pushed the company to solicit
additional buyers through an auction.
In July, an acquisition vehicle owned by Dish set a baseline
bid of $2.22 billion in cash and about $1.3 billion in assumed
contractual obligations for spectrum belonging to LightSquared's
operating company. If another suitor tops Dish's proposal,
LightSquared would owe it a $51.8 million break-up fee.
Dish's current bid would remain valid for 60 days after
LightSquared chooses another buyer, which offers the company
some protection in case the transaction falls apart,
particularly for regulatory reasons.
In August, MAST Capital, the sole backer of LightSquared's
$63 million bankruptcy loan, bid the full amount of the loan,
plus $1, for spectrum leases at LightSquared's parent company.
Bidding procedures enabling other suitors to bid for some or
all of the company's assets were finalized last week.
Further complicating matters for Harbinger is the effect of
sequestration on the FCC. The agency's workers have largely been
furloughed, which could delay FCC clearance for the company.