* Funding from new and existing investors
* To use funds for building high-speed network
* Analysts still see Clearwire as main Sprint partner
* Clearwire shares rise 4.5 pct (Adds LightSquared comment, details about rival Clearwire)
NEW YORK, July 5 (Reuters) - LightSquared, the telecom start-up backed by Philip Falcone’s Harbinger Capital hedge fund, said on Tuesday that it has raised $265 million in funding from existing and new investors.
The company, which needs billions of dollars of additional funding for a high-speed wireless network it is planning, was required to raise $250 million in new funding under the conditions of agreements with its existing debt holders.
Roughly half of the latest funding came from new investors while the rest came from existing investors including Harbinger, according to LightSquared’s Chief Marketing Officer Frank Boulben who declined to name the new investors.
“We see this as a strong vote of confidence from our existing and new investors,” Boulben told Reuters, adding that the company had received the money on July 1.
LightSquared, which has been largely bankrolled by Harbinger, said that, including the latest funding, it has now raised $2.3 billion over the last 12 months. This is on top of about $3 billion worth of assets Harbinger has contributed.
Earlier this year, Falcone began giving his hedge fund investors the ability to directly invest in shares of privately held LightSquared. Also some Harbinger investors seeking to redeem their money have been given shares in LightSquared as an alternative to cash.
LightSquared said it plans to use the funding for corporate purposes including network construction.
However, the company also needs to resolve interference problems with global positioning system services before it can gain approval from U.S. regulators to go ahead with the network plan, which has been bitterly contested by GPS companies. [ID:nN1E75T0FF]
The uncertainty around LightSquared’s ability to go ahead with the network has made the venture one of billionaire money manager Falcone’s riskiest and most high profile bets to date.
That LightSquared was able to raise $15 million more than it needed this time could be a positive sign for the company, Credit Suisse analyst Jonathan Chaplin said. But he added that the venture needs “a lot more capital than this.”
If it gets the go ahead to build its network, LightSquared is expected to reduce construction costs with a network-sharing deal with Sprint Nextel (S.N), which is currently the biggest customer of LightSquared rival Clearwire Corp CLWR.O.
Shares in Clearwire rose 4.5 percent on Nasdaq after Credit-Suisse’s Chaplin upgraded its shares to “outperform” on Tuesday as he bet that Sprint would keep Clearwire as its primary network partner even if it goes ahead with an agreement with LightSquared.
“Clearwire should always be a cheaper source of capacity for Sprint than anybody else out there,” said Chaplin, who said some investors worried that a Sprint deal with LightSquared would put Clearwire out of the picture.
Chaplin also cited uncertainties around LightSquared in a research note announcing the upgrade.
Shing Yin of Citadel Securities also said in a research note on Monday that “LightSquared’s challenges make Clearwire more valuable to Sprint.”
Clearwire shares were up 4.5 percent to $3.99 in noon trading on Nasdaq. (Reporting by Sinead Carew; Editing by Gerald E. McCormick and Tim Dobbyn)