By Dow Jones Business News, October 17, 2013, 01:28:00 PM EDT
By Joseph Checkler
LightSquared lost $55.5 million in September, bringing the wireless satellite company's losses since filing for
bankruptcy to more than $934 million.
In a Wednesday filing with U.S. Bankruptcy Court in Manhattan, LightSquared again attributed a bulk of its losses to
interest expenses on its debt. In September, the company paid $33.5 million in interest expenses and now has put $535.3
million toward interest since its Chapter 11 filing in May 2012.
While LightSquared's plodding bankruptcy case has made progress in September and early October, having received
approval to auction its assets and send its competing reorganization plans to creditors for a vote, the additional
losses underscore the need for a successful sale of those assets next month.
The bulk of the interest payments have gone to the owners of $1.7 billion in bank debt owned by a group of hedge funds
and an entity controlled by Dish Network Corp. ( DISH ) Chairman Charles Ergen, but Dish's $2.2 billion bid for
LightSquared's wireless spectrum assets would pay off that debt. Despite the Dish bid, LightSquared, which is controlled
by Philip Falcone and his Harbinger Capital Partners hedge-fund firm, is seeking a competing bid for the assets at an
auction set for late next month.
Apart from the interest expenses, LightSquared also paid $3.5 million to the lawyers and professionals working on its
bankruptcy case and said it shelled out $45 million to them since its Chapter 11 filing. Salaries, commissions and other
fees were $1.4 million for the month and were $117.1 million since the bankruptcy was filed.
LightSquared filed for bankruptcy protection in May 2012 after the U.S. government said the company's network could
interfere with global-positioning systems, causing the Federal Communications Commission to revoke LightSquared's
license to use the wireless spectrum.
That wireless spectrum remains valuable, and Mr. Falcone has been committed to building a nationwide, high-speed
network for years with the goal of offering cheap cellphone and wireless service. The FCC has done further testing of
LightSquared 's network and currently is considering whether to approve the company's application to share some of the
government's spectrum and modify its licenses.
Mr. Falcone wants the company to wait for FCC approval of LightSquared's network, saying the company is worth far more
than what Dish bid. He's also suing Mr. Ergen, saying Mr. Ergen's investment vehicle is a Dish entity and should have
been prohibited from acquiring the $1 billion in debt it bought. Mr. Ergen is asking LightSquared's bankruptcy judge to
toss the suit, saying he controls the entity that bought the debt and isn't subject to the same restrictions as Dish.
Mr. Falcone's legal woes have further complicated his efforts to keep control of the company. The SEC last year
charged him with, among other things, taking a $113 million loan from a Harbinger fund to pay his personal taxes as
other investors were prevented from withdrawing money.
After Mr. Falcone's initial settlement with the SEC was deemed too lenient, the two sides this past summer reached a
new deal that called for Mr. Falcone to pay about $18 million in financial penalties and agree to a five-year ban from
the securities industry. He also admitted wrongdoing, a first-time occurrence in SEC settlements not related to people
who had pleaded guilty in a criminal proceeding or been criminally convicted. Despite the ban, Mr. Falcone is still
allowed to stay involved with LightSquared.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to
Write to Joseph Checkler at firstname.lastname@example.org
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