By Dow Jones Business News,
January 03, 2014, 02:05:00 PM EDT
Phil Falcone and LightSquared urged a bankruptcy judge to reject a plan to sell the company's wireless spectrum assets
to Charlie Ergen's Dish Network Corp., a deal they say is inferior to LightSquared's proposal to reorganize on its own.
In a Thursday filing with U.S. Bankruptcy Court in Manhattan, LightSquared noted Dish's stock price has risen nearly
50% since it made a bid for the spectrum assets, meaning investors think the assets are worth much more than Dish's $2.2
"There is no question how the market views such assets," LightSquared said in its filing.
Mr. Falcone's Harbinger Capital Partners, which controls LightSquared's equity, said in a separate filing that the
Dish bid values the assets at less than 25% of the enterprise value that LightSquared's own reorganization plan
proposes. He said the lenders backing Dish's bid just want to be paid.
"The debtors' secured creditors, with nothing to gain from the debtors' reorganization, continue to push for a sale
liquidation to serve their parochial and largely illegitimate purposes," Harbinger's lawyers said in their filing.
Judge Shelley C. Chapman of U.S. Bankruptcy Court in Manhattan will next week consider whether to approve the proposal
by those lenders to sell the company's wireless spectrum to Dish. She'll also be asked to approve a plan to sell a
smaller part of the spectrum to LightSquared creditors Mast Capital Management and US Bancorp, which LightSquared also
But LightSquared will get its say later in January, when it is expected to make the case for Judge Chapman that its $4
billion restructuring proposal--led by Fortress Investment Group LLC--is actually better than the Dish sale and smaller
sale. After all the hearings are done, the judge will then decide whether to approve the LightSquared proposal or the
Dish and Mast sales. Spectrum refers to the limited pockets of airwaves that mobile phone and Internet companies use.
LightSquared "s proposal, filed Dec. 26, is backed by Fortress, Melody Capital Advisors LLC, J.P. Morgan Chase & Co.
and Harbinger. It includes $2.5 billion in so-called exit financing, a $250 million loan earmarked for a reorganized
LightSquared and a Melody-led $285 million bankruptcy loan. Dish has said that its purchase isn't contingent on
obtaining the Federal Communications Commission approvals that LightSquared needs, since it wouldn't be using the
spectrum for the same purposes.
All the plans would pay off the lender group holding nearly $2 billion in LightSquared bank debt, a group that
includes hedge funds and an investment entity wholly owned by Mr. Ergen. LightSquared has said Mr. Ergen illegally
bought that debt on behalf of Dish, a competitor that wouldn't have been allowed to buy it. Mr. Ergen and Dish are
fighting the suit, saying those allegations are false.
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.
Since then, LightSquared has tried to clear up the regulatory concerns while Mr. Falcone has fought to maintain
control of the company. The Dish bid, made last year, caused LightSquared to eventually consider an auction of the
assets, although it canceled the auction at the last minute and soon after presented its latest restructuring proposal.
The fate of the company should be determined by Judge Chapman's decisions over the next month.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to
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