LONDON (Reuters) - Inmarsat (ISA.L) said it had received an overdue $56.25 million payment from LightSquared, the U.S. group attempting to build a mobile network using the British satellite firm’s spectrum, and in return it would suspend further payments until 2014.
The agreement gives LightSquared, which is backed by Philip Falcone’s Harbinger Capital Partners, breathing space to gain regulatory clearance for the network, Inmarsat said in a statement on Friday.
LightSquared’s plans were derailed when the U.S. Federal Communications Commission in February proposed to stop it from building a high-speed wireless network after tests had found that the network could interfere with GPS services used by everyone from farmers and drivers to airlines and the military.
The blow put LightSquared’s future in jeopardy, and Falcone, who has invested more than 60 percent of his $4 billion Harbinger Capital Partners’ assets in the venture, has considered filing for voluntary bankruptcy to salvage the company.
Inmarsat, whose satellites provide communications for shipping and aircraft, said that under an amended cooperation deal with the cash-strapped company, it had suspended quarterly payments of nearly $30 million and an overdue payment of $29.6 million for two years.
“As a result of the amendment announced today, LightSquared will no longer be in default in relation to any payments under the cooperation agreement,” Inmarsat said.
LightSquared interim Chief Operating Officer Doug Smith said in a statement that the new agreement allows the company “to focus its efforts on obtaining the necessary regulatory approvals” for its network.
The payments from LightSquared have bolstered Inmarsat’s revenues against a slowdown in its core shipping business and less use of its services by the military.
An Inmarsat spokesman said it had recognized $154 million from the LightSquared deal over the last two years, and following Friday’s agreement it had “a high degree of confidence” it would be able to recognizes a further $325 million.
Inmarsat shares gained about 6 percent to 447 pence by 9.38 ET, the best performing stock on a flat FTSE 250 midcap index .FTMC..
Reporting By Drazen Jorgic and Paul Sandle in London, Sinead Carew in New York; Editing by Mike Nesbit and M.D. Golan