By Dow Jones Business News,
February 15, 2014, 11:32:00 AM EDT
By Joseph Checkler
Wireless venture LightSquared has filed a new reorganization plan that isn't contingent upon regulatory approval
for its network and doesn't include participation from Dish Network Corp. or its chairman Charlie Ergen.
In a filing with the U.S. Bankruptcy Court in Manhattan on Friday, LightSquared proposed a $2.65 billion
restructuring backed by Fortress Investment Group that unlike a previous Fortress-backed plan, doesn't hinge on the
Federal Communications Commission modifying LightSquared's licenses.
The new plan, scaled down from a $4 billion Fortress-led reorganization that LightSquared abandoned earlier, calls
for a $1.65 billion loan while the company is in bankruptcy proceedings and then a fresh $1 billion loan to finance the
company once it exits Chapter 11. The new plan requires less funding because LightSquared would emerge from bankruptcy
proceedings much sooner than under the previous proposal.
Phil Falcone's Harbinger Capital Partners, which currently controls LightSquared, would participate in the new
financing and retain an equity stake.
In its filing, LightSquared said most of its lenders would be paid back quickly, and only basic regulatory
approvals would be required.
"Against the backdrop of the Chapter 11 cases, which involve complex facts and circumstances and an ever-changing
inter-creditor dynamic, this result is nothing short of remarkable," LightSquared said in the filing.
The company is asking for a Feb. 24 hearing on the proposal because it wants to re-solicit some creditors who must
vote on the proposal. Judge Shelley C. Chapman, LightSquared's bankruptcy judge, voiced concern at a recent hearing that
LightSquared was running out of cash and must get a restructuring plan approved soon.
The new plan includes support from Fortress, Harbinger and Melody Capital Advisors LLC, who would be pumping new
money into LightSquared and would gain control of the reorganized company's equity. Hedge funds holding more than $800
million in LightSquared's bank debt would be paid in full.
Mr. Ergen, who owns another $850 million of that debt, would be paid in full if he votes for the plan. He could
receive less if he votes against it, the filing says.
The complicating matter is that LightSquared is suing Mr. Ergen separately, saying he improperly made his debt
purchases on behalf of Dish while Dish was bidding on LightSquared. If LightSquared wins that case, some or all of the
debt held by Mr. Ergen could be canceled or subordinated below other creditors.
A Dish spokesman declined to comment.
Dish earlier this year abandoned a $2.2 billion bid for most of LightSquared's spectrum assets, throwing the case
into more uncertainty. That bid wasn't contingent upon the same regulatory approvals as LightSquared's proposals,
meaning creditors could have been repaid sooner.
Spectrum refers to the limited pockets of airwaves that mobile phone and Internet companies use. Dish has acquired
large swaths of spectrum over the past few years, sometimes buying it for low prices from companies in bankruptcy
LightSquared filed for protection from creditors in May 2012, after federal regulators refused to clear its plans
to launch a wireless network, which they said could interfere with global-positioning systems. Its previous proposals
all were contingent upon the FCC approving modifications to LightSquared's network, which the agency has said isn't
Write to Joseph Checkler at firstname.lastname@example.org
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