| NEW YORK
NEW YORK Jan 16 Phil Falcone, the billionaire
investor whose Harbinger Capital Partners owns wireless
satellite company LightSquared, said Thursday he expended
considerable energy in 2012 and 2013 trying to work out who was
buying up LightSquared's debt.
The purchases, which later turned out to have been made by
Dish Network Corp Chairman Charles Ergen, are at the
center of a trial in the U.S. bankruptcy court in New York this
LightSquared and Falcone accuse Ergen of hiding his identity
as the purchaser to overcome restrictions on competitors such as
Dish from buying LightSquared debt. Ergen, who testified in the
trial earlier this week, said he bought the debt on his own
behalf and not for Dish.
In court on Thursday, Falcone described efforts by himself
and associates to determine the identity of the buyer, saying it
was a volatile and fluid process in which hunches changed
frequently, sometimes in the span of a few minutes.
In a string of emails in 2012 and 2013 with bankers,
investors and journalists, Falcone speculated the buyer could be
anyone from Ergen to Mexican billionaire Carlos Slim to AT&T,
Cablevision and others.
Lawyers for Dish and Ergen tried to show that Falcone knew
all along that Ergen was behind the deals, but did not stop him
because Ergen's interest could boost LightSquared's value.
They focused on other emails in which Falcone implied he
knew Ergen was behind the deals, even once suggesting to other
debtholders that they sell to Ergen.
Falcone described those emails as facetious.
"I was joking," he said.
In his testimony earlier this week, Ergen attributed his
secrecy to a desire to keep the price of the debt low, rather
than any effort to circumvent rules.
The trial pits Falcone and Ergen head to head in what could
be a battle for control of LightSquared's valuable broadband
LightSquared filed for bankruptcy in 2012 after the Federal
Communications Commission blocked its efforts to build a
wireless network on fears it could interfere with GPS systems.
After Ergen bought up LightSquared's debt, Dish made a $2.2
billion bid for its wireless broadband rights last year. Dish
pulled its bid last week.
Harbinger and LightSquared opposed the bid and are pushing a
restructuring in which LightSquared would receive $2.75 billion
in new loans and at least $1.25 billion in equity investment
from Fortress Investment Group and others.
If Dish and Ergen are found liable at the trial,
LightSquared could recoup damages to help pay creditors, and
Ergen's claims against LightSquared as a creditor would be
Falcone believes he can regain regulatory approval to
salvage LightSquared's network, a point that Dish's lawyer
grilled him about on Thursday, saying Falcone could not know
whether the FCC plans to grant approval.
"Being as close to it as I am, I have a pretty good feeling
what they're going to do," he said.
Dish's lawyers also questioned Falcone about a 2006
statement in which he compared LightSquared's wireless rights to
The lawyer, Robert Giuffra, said beach-front property is
only as valuable as what can be built on it.
"We don't know whether they'll let you build a small house
or a big house," Giuffra said.