NEW YORK, Dec 20 (Reuters) - Bankrupt wireless communications firm LightSquared Inc is once again seeking to raise exit financing, sources said Friday. The company is now targeting a $2-2.5 billion senior secured first-lien exit term loan, sources added.
JP Morgan and Credit Suisse are sounding out investors on the financing, sources said. The banks are not committed or contracted to providing or arranging the credit, the same sources noted.
LightSquared was unavailable to comment by press time.
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.
Ergen and Dish’s July bid for LightSquared, 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 bid to remain independent helped derail the financing, leading to subsequent lawsuits filed by LightSquared and its biggest shareholder Harbinger Capital Partners against Dish, Ergen and related investment affiliates.
In the latest attempt to secure exit financing, LightSquared is offering a three-year loan with a 12 percent coupon, all payable-in-kind, and 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 LightSquared’s 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 years.
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.
The company is asking for lender commitments by January 8.