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 proceedings.
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 imminent.
Write to Joseph Checkler at joseph.checkler@wsj.com