* Talks with LightSquared debtholders falter
* LightSquared nearer to bankruptcy filing
By Sinead Carew and Matthew Goldstein
May 13 Philip Falcone's telecom start-up
LightSquared edged closer to a bankruptcy filing o n
Su nday as the hedge fund manager was far from an agreement with
creditors, sources familiar with the matter said.
Falcone has until Monday at 5 p.m. EDT (2100 GMT) to reach
an agreement or face a default on a $1.6 billion loan, sources
Creditors have been negotiating to restructure
LightSquared's 96 percent ownership by Falcone's Harbinger
"The bondholders are asking for conditions they know
Harbinger and Phil cannot agree to," said a source close to the
Falcone did not respond to a request for comment.
Representatives for Harbinger and LightSquared declined to
comment on Sunday.
Debt holders could have declared a default on the loan,
which would have forced a bankruptcy, if there was no agreement
by April 30. The deadline has been extended twice.
LightSquared's future was thrown into doubt in February when
the U.S. Federal Communications Commission said it would revoke
its permission to build a high-speed wireless network as tests
found risks of interference with Global Positioning Systems.
These systems support crucial services such as aviation
safety and military systems as well as devices used in
industries such as construction and agriculture.
LightSquared creditors have included hedge fund manager
David Tepper, billionaire investor Carl Icahn and hedge funds
including Fortress Investment Group, Knighthead Capital
Management, Redwood Capital Management and investment firm
Capital Research and Management Co.
Icahn recently sold his $250 million position in the company
for a profit, according to sources.
"From the start, it didn't appear they weren't negotiating
in good faith. It seemed as if they were only interested in
seeing if they could force Phil to hand them control of the
company so they could flip it for a quick profit," the source
close the situation said.
"Despite this feeling, Phil and the Harbinger team continue
to try to see if there is some middle ground. But it appears
only one side wants a deal," the source added.
LightSquared's fate has become an important concern for
investors in Falcone's $3.8 billion hedge fund, which has sunk
some 60 percent of its money into the telecom startup.
Last year, Harbinger posted a 47 percent decline in value,
largely because of a write-down on the value of the fund's