| New York
New York Feb 3 An investment vehicle owned by
Dish Network Corp Chairman Charles Ergen is joining an
existing lender group to extend $33 million in financing to
bankrupt wireless company LightSquared, court filings show.
LightSquared's equity owner, Phil Falcone's Harbinger
Capital Partners, is fighting to keep control of the company in
a messy bankruptcy. Ergen's investment vehicle has bought up
much of LightSquared's debt, while Dish offered and later
withdrew a $2.2 billion offer to purchase the company's
spectrum, an offer Harbinger did not accept.
LightSquared, which could run out of cash by March, needs a
debtor-in-possession financing loan to keep operating while in
bankruptcy, at least through the end of the first quarter. It
has said it expects its restructuring efforts to extend into
A court hearing to approve the proposed loan is slated for
LightSquared, which wants to build a massive wireless
network, filed for bankruptcy protection in May of 2012 after
the Federal Communications Commission revoked its spectrum
license. The FCC cited concerns that the proposed network could
interfere with GPS systems.
Last month, LightSquared received three separate bankruptcy
loan proposals. One was from a subset of its largest lender
group, one from the Ergen entity, and one from Fortress
Investment Group. Last week, Fortress joined the lender
group, leaving Ergen's as the sole competing offer.
The Ergen vehicle is LightSquared's largest single creditor,
having bought up chunks of debt throughout 2012 and 2013.
Monday's filing includes him in the loan, which already featured
financing from Aurelius Capital Management, Cyrus Capital
Partners, Solus Alternative Asset Management, Fortress and
While cooperation between Ergen and LightSquared has been
rare throughout the bankruptcy, it may be necessary on the loan
to give the sides breathing room to negotiate LightSquared's
restructuring. It does not mean the sides have reached common
ground about the fate of the company, and a lawsuit remains
pending in which LightSquared has accused Ergen of
surreptitiously buying up its debt so he could control the
company's capital structure and effect a Dish takeover.
Dish offered $2.2 billion to acquire LightSquared spectrum,
an offer to which LightSquared never warmed, and which was
withdrawn last month.
LightSquared is facing three separate proposals for how it
should restructure, but said in a court hearing last week that
it plans to engage creditors in talks toward a consensual deal.
Harbinger itself had also proposed a loan, but Monday's
filing suggests the company will not take it.
Harbinger's loan would have been structured as a junior loan
to avoid a fight with senior LightSquared lenders over
collateral claims. Harbinger's bankruptcy claims rank below
those of the secured group, and a senior loan from Harbinger
would have elevated its claims above those of other lenders.