By Billy Cheung and Michelle Sierra
NEW YORK Dec 20 Bankrupt wireless
communications firm LightSquared Inc is seeking to raise a
$2-2.5 billion senior secured first-lien term loan backing a
Fortress Investment Group-sponsored bankruptcy exit plan,
sources said Friday.
JP Morgan and Credit Suisse are sounding out investors on
the financing that would help Fortress purchase the company out
of bankruptcy, sources said. The banks are not committed or
contracted to providing or arranging the credit, the same
LightSquared declined to comment.
LightSquared had attempted to raise a $3 billion exit loan
in June and July through Jefferies but pulled the financing when
Dish Chairman Charlie Ergen emerged as the largest creditor for
the company. The Jefferies loan would have backed an exit plan
sponsored by majority shareholder Harbinger Capital Partners.
Ergen's involvement and a subsequent $2.2 billion July bid
by Dish for LightSquared's operating assets, combined with the
expiration of the exclusivity period for the company to put
forth a restructuring plan, allowed the company's biggest
creditor group to push for LightSquared's sale.
The uncertainty around LightSquared's attempt to remain
independent helped derail the Harbinger financing, leading to
lawsuits filed by LightSquared and Harbinger against Dish, Ergen
and related investment affiliates.
As per the Fortress-sponsored exit financing plan,
LightSquared is offering a three-year loan with a 12 percent
coupon, all payable-in-kind. The loan would be sold at a
discount price of between 95 and 97.
The maturity could be extended by a year, subject to a
minimum liquidity test. Lenders would receive a 1.5 point fee
for agreeing to an extension.
Given that LightSquared's wireless network build out plans
remain suspended by the Federal Communications Commission (FCC),
lenders have been asked to commit to the deal for six months
with a potential three-month extension.
Lenders would be paid a 100bp fee upon confirmation of the
Fortress-backed restructuring plan in bankruptcy court. If
LightSquared exercises the commitment extension while in
bankruptcy, lenders would receive a 50bp fee.
In addition, the loan would be subject to a minimum
liquidity covenant during the extension period.
The exit loan would not be callable for the first year and
then would have 106 and 103 call protection for the next two
The closing of the loan depends on additional equity
injected into the company post-bankruptcy and the FCC allowing
LightSquared to resume developing its spectrum.
A pre-taped roadshow will be available beginning December 26
with a lender call scheduled for January 6. Fortress and
LightSquared would be available to field potential lenders'
questions upon request before the lender call.
The company is asking for lender commitments by January 8.