| NEW YORK
NEW YORK Jan 13 Dish Network Corp
Chairman Charles Ergen said on Monday he had bought
LightSquared's secured debt because it was a "great investment,"
and said he did so on his own behalf and not for Dish.
The question of why Ergen bought LightSquared's debt is
central to a trial in the U.S. Bankruptcy Court in Manhattan in
which Ergen is accused of doing so to help Dish in a plan to
LightSquared and its owner, Harbinger Capital Partners, have
said that Ergen created an investment vehicle to buy
LightSquared debt without revealing the identity of the buyer.
The move was done to get around a credit agreement that barred
debt purchases by LightSquared competitors, like Dish,
LightSquared and Harbinger alleged in a lawsuit.
Testifying in court on Monday, Ergen acknowledged that, from
mid-2012 through last year, he accrued enough LightSquared debt
to influence the company's restructuring. But he insisted it was
not done improperly, or as part of Dish's plan to acquire
"I loved the investment," said Ergen, who said he spent
about $700 million of his own money to acquire about $850
million worth of debt. "I believed the value of that investment
had gone up."
LightSquared went bankrupt in May of 2012, when the Federal
Communications Commission blocked its efforts to build a
wireless network amid fears it could interfere with GPS devices.
Dish made a $2.2 billion bid for LightSquared last year, but
withdrew the offer on Thursday.
Harbinger officials are pushing a competing restructuring
plan for LightSquared under which the company would
receive $2.75 billion in fresh loans and at least $1.25 billion
in equity investment from Fortress Investment Group and others.
Ergen on Monday testified that his desire to conceal his
identity was to keep the price of the debt low, and not to
circumvent any rules.
"If I were associated with the purchase of anything, it was
going to raise the price, so I didn't want to raise the price of
something I was interested in investing in," Ergen said.
During his testimony, LightSquared lawyers used Ergen's past
communications to show that Dish had interest in LightSquared's
According to a transcript of an August earnings call, read
in court, Ergen said he found LightSquared "interesting" because
its spectrum "could fit with the spectrum we have in the
long-term," and is "very similar" to spectrum Dish acquired from
other bankrupt entities.
And, according to emails presented during cross-examination,
Ergen in one instance directed a party from whom he was buying
LightSquared debt to vote against giving LightSquared an extra
week to negotiate a restructuring plan with creditors.
That is a key revelation because Ergen has denied that
delays in the closing of his trades were done on purpose to
hinder LightSquared's negotiations with creditors.
Asked about the vote during cross-examination, Ergen said he
was visiting his daughter at college at the time, wasn't focused
on the LightSquared matter and didn't have details about the
terms and conditions of the proposed extension with him.
"Ergen's testimony is giving a glimpse into more of his
strategic thinking in recent years," Walter Piecyk, a BTIG
analyst, told Reuters.
Dish shares closed down $1.26, or 2.2 percent, at $55.95 on
the Nasdaq on Monday.
Lawyers for LightSquared and Harbinger last week alleged
that Ergen used money from his daughter's trust fund to buy the
debt, but Ergen testified that he is the sole beneficiary of the
so-called Lindsey Revocable Trust, and said it is named for a
Colorado mountain that he once hiked.
Ergen did say, however, that his wife, who is a trustee, was
not consulted before he removed the money to invest in
Last year, when Ergen finally revealed the investment to his
wife, he said she was surprised.
"She said, 'Did you think you might want to tell me about
that?'" Ergen said.
Phil Facone of Harbinger Capital Partners is tentatively
scheduled to take the stand on Wednesday.