| NEW YORK
NEW YORK Feb 15 Bankrupt wireless company
LightSquared Inc has proposed a new restructuring plan that
would remove certain regulatory hurdles to its exit from Chapter
11 while potentially subordinating the bankruptcy claim held by
its largest creditor, an entity run by Dish Network Corp
Chairman Charles Ergen.
In court papers filed late on Friday night, LightSquared
outlined a restructuring plan fueled by $2.35 billion in new
financing from Fortress Investment Group and others, which would
not be contingent on gaining regulatory approval for a planned
wireless network, as was its previous plan.
It would allow its current equity owner, Phil Falcone's
Harbinger Capital Partners, to retain a stake in the company
post-bankruptcy, along with Fortress and Melody Capital, also a
financier of the new loans.
But Ergen's investment vehicle, despite being the largest
holder of LightSquared's loan debt, would be paid out in the
form of new debt, rather than cash, like other lenders. The new
debt may or may not be secured by collateral, depending on
whether Ergen votes in favor of the plan.
LightSquared and Ergen have been at odds since early in the
bankruptcy. In a separate and still pending lawsuit,
LightSquared has sued Ergen, claiming he surreptitiously bought
up huge chunks of the company's debt in an effort to set the
stage for a takeover by Dish. Ergen has maintained that the
purchases were personal, and not on Dish's behalf.
LightSquared declared bankruptcy in 2012, after the Federal
Communications Commission revoked its license to build a massive
wireless network over concerns that it could interfere with GPS
systems. Falcone has said he believes the company can regain FCC
approval sometime this year.
While the restructuring plan contemplates paying most
secured lenders in cash, the company would treat Ergen's
investment vehicle differently. In exchange for his claims,
Ergen would get a $1.1 billion note.
If Ergen votes in favor of the plan, the note would be
secured by collateral, and the company would provide Ergen with
releases from certain legal claims. If he turns down the offer,
the size of Ergen's note would be reduced and could be
unsecured, and the legal releases would vanish.
The plan and its terms, however, are subject to court
approval, with a hearing set for March 17 in U.S. Bankruptcy
Court in Manhattan before Judge Shelley Chapman. Potentially
accelerating Ergen's decision is LightSquared's request for
lenders to vote on the plan by March 3 and any objections to be
lodged by March 10. Whether that timetable is appropriate will
be taken up at a separate hearing before Judge Chapman on Feb.
LightSquared has been trying to create a bankruptcy exit
plan that would bridge disagreements between various fractious
lender and creditor constituencies, some of which had proposed
their own plans for how to restructure the company.
LightSquared plans to raise $1.65 billion in bankruptcy
loans, which would consist of $1.35 billion of new money from
Fortress, Melody and JPMorgan Chase & Co. The remaining
$300 million would come from existing LightSquared lenders
rolling their pre-bankruptcy claims into the new loan.
The company said it later plans to raise another $1 billion
of senior loans to fund its exit from Chapter 11.
LightSquared's plan also includes an updated valuation from
Moelis, the company's financial adviser, which provides a range
of $6.2 billion and $9.1 billion for its assets.
The case is In Re LightSquared Inc et al., U.S. Bankruptcy
Court, Southern District of New York, No. 12-12080