By Stephanie Gleason
NEW YORK---Dish Network Corp. (DISH) Chairman Charlie Ergen
would receive a controlling stake in troubled wireless company
LightSquared under the company's newest restructuring plan,
announced in court Monday.
The deal, reached Friday as a result of mediation with U.S.
Bankruptcy Judge Robert Drain, would give Mr. Ergen 60% of the new
equity in the restructured LightSquared plus $1 billion in new
junior debt. J.P. Morgan Chase & Co. (JPM), one of
LightSquared's lenders, would receive a total of 31.9% of the
equity in exchange for $189 million in funding. Other lenders would
receive a small piece of equity and warrants to purchase common
stock.
The plan has the support of all LightSquared parties except that
of Harbinger Capital Partners' Philip Falcone. In a statement read
during the hearing, Judge Drain said that while a fully consensual
plan was the goal of mediation, "I have concluded at this time such
a result cannot be achieved."
To satisfy Harbinger's claims, $189 million is being set aside
in an escrow account, funded by J.P. Morgan, until those claims are
settled. Mr. Falcone is entitled to no other compensation under the
plan.
Harbinger has held a controlling stake in LightSquared but lost
a major battle earlier this year to push through a plan that would
have allowed the investment firm to retain a piece of the company
and settle Mr. Ergen's claim with cash and an unsecured note.
The proposal still faces hurdles--mainly the approval of U.S.
Bankruptcy Judge Shelley Chapman. Previous proposals, including one
reached through mediation with Judge Drain, have failed or have
fallen apart.
LightSquared filed for Chapter 11 in May 2012 after the FCC
refused to clear its plans to launch its wireless network, citing
fears that the network would interfere with global-positioning
systems.
-Joseph Checkler contributed to this article.
Write to Stephanie Gleason at stephanie.gleason@wsj.com.
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