By Dow Jones Business News,
January 13, 2014, 05:37:00 PM EDT
By Joseph Checkler
NEW YORK-- Dish Network Corp. Chairman Charlie Ergen testified he wanted to keep his purchases of LightSquared's
debt confidential because he didn't want to drive the price up, not because he was secretly buying it on behalf of
LightSquared suitor Dish.
"I didn't want to raise the price of something I was investing in," Mr. Ergen said on the third day of a trial over
whether he made the purchases on behalf of Dish, a LightSquared competitor that would have been prohibited from buying
the debt. He also said on Monday, "I just don't really like people knowing my personal investments, although I guess
it's public record now."
Mr. Ergen said that when he personally started accumulating LightSquared debt in 2012, it was a personal investment
and Dish wasn't interested in buying the company.
Dish withdrew its bid last week, but LightSquared is still trying to prove that Mr. Ergen's trades were illegally
made for Dish, which could cause his claims in the bankruptcy case to take a back seat to those of other creditors.
Judge Shelley C. Chapman, LightSquared's bankruptcy judge, will ultimately decide the issue.
Also, it's unclear whether Dish has walked away for good, or whether it will still make an offer for LightSquared's
But last spring, Dish made a $2.2 billion offer for that spectrum. Mr. Ergen said Dish became interested only after
it understood that the type of wireless spectrum LightSquared owned would match up well with its own spectrum. Spectrum
refers to the limited pockets of airwaves that mobile phone and Internet companies use. Mr. Ergen said that at one
point, he explored purchasing LightSquared for himself along with Blackstone Group LP's (BX) GSO Capital Partners, a
hedge fund in which he invests.
At the time of Dish's 2013 bid, Mr. Ergen personally was the largest holder of LightSquared's bank debt with about
$850 million worth. LightSquared, which is controlled by Phil Falcone and his Harbinger Capital Partners hedge fund
firm, says the debt was acquired for Dish.
In court Monday, Mr. Ergen said that he used almost $700 million of his own money to buy the LightSquared debt,
from a trust fund in which his wife is a co-beneficiary. That debt currently is worth about $850 million, Mr. Ergen
testified, adding he has earned a $150 million profit. He also said he could be entitled to much more in "accrued
interest" if the debt is paid off in LightSquared's bankruptcy.
LightSquared and Harbinger have said the debt purchases were illegal, because the purchases by Mr. Ergen's SP
Special Opportunities LLC investment vehicle were actually for Dish, not Mr. Ergen. LightSquared's lawyer asked Mr.
Ergen questions about both his own and Dish's actions related to LightSquared, sometimes saying "you" for both. Judge
Chapman insisted the lawyer be clearer when asking those questions.
Last week, Dish Treasurer and Ergen confidante Jason Kiser testified that Mr. Ergen was advised to create the new
investment vehicle for the LightSquared purchases. Making the purchases in his own name, the advisers thought, could
have been legally treated as though they were done for Dish. Harbinger's Mr. Falcone is expected to testify later this
In its main bankruptcy case, LightSquared is pushing for a $4 billion restructuring proposal-led by Fortress
Investment Group LLC (FIG)-that it says is better than the now-abandonded Dish sale and a sale of a smaller swath of the
company's wireless spectrum to creditors U.S. Bancorp (USB) and Mast Capital Management.
Both the Dish sale and LightSquared plans would have paid off the holders of more than $1.8 billion in LightSquared
bank debt, a group that includes Mr. Ergen's SP vehicle as well as several hedge funds.
Those hedge funds had presented the $2.2 billion Dish sale as a reorganization plan for LightSquared, and as
recently as last Tuesday said that they still wanted to move forward with that deal. The lenders on Monday said they
don't think Dish's bid is officially terminated, and they still hope to go forward with it.
LightSquared filed for bankruptcy protection in May 2012 after federal regulators refused to clear the company's
network plans, which they said could interfere with global-positioning systems. Dish's bid was less contingent on
regulatory approvals than the LightSquared proposal, which Dish had touted as a reason its proposal was superior.
Write to Joseph Checkler at firstname.lastname@example.org
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