By Tom Corrigan
LightSquared on Thursday will seek permission from a bankruptcy
judge to pay a $200 million breakup fee to the backers of its
restructuring strategy in case the mobile-satellite company's
Chapter 11 exit doesn't go as planned.
LightSquared said Fortress Investment Group LLC (FIG) would get
nearly half the $200 million, payable only if LightSquared opts for
an alternative restructuring proposal. Two other backers of the
plan, Centerbridge Partners LP and Sig Holdings Inc., would get the
rest.
Philip Falcone's Harbinger Capital Partners, which currently
controls LightSquared's equity and is investing new money in the
restructuring, wouldn't get any of the breakup fee.
Last month, LightSquared filed the latest of its restructuring
proposals, one that includes Mr. Falcone but proposes to give
control of the company to others, including Fortress and
Centerbridge.
The plan presented by LightSquared last month would pay off its
largest creditor, DISH Network Corp. (DISH) Chairman Charlie Ergen,
via a five-year note rather than cash. Mr. Ergen, who is owed about
$1 billion, is the only major creditor who doesn't support the
plan.
Under the plan, Mr. Falcone's Harbinger would own 44.4% of
LightSquared's equity, with Fortress getting 26.2% and Centerbridge
8.1%. The rest of the equity would go to current investors in a
smaller piece of the company, called LightSquared Inc.
On Friday in Wilmington, Del., Trump Entertainment Resorts Inc.
(TRMYQ) will ask Judge Kevin Gross to sign off on a revised
turnaround plan based on the promise of a $20 million lifeline from
Carl Icahn, the billionaire lender who is trying to get the
gambling company out of bankruptcy in one piece.
Assuming Trump Entertainment's new Chapter 11 plan moves through
court on schedule, it could be ready for implementation by
mid-March. The new loan being offered is believed to be sufficient
to keep the Trump Taj Mahal casino open until there is a decision
from a federal appellate court in the company's dispute with its
union over benefits.
Chapter 11 plan papers estimate unsecured creditors will get a
recovery of less than a half-cent on the dollar of what they are
owed. A claim for a pension shortfall is the largest item in the
pile of unsecured debt, while trade creditors are owed about $15
million, Trump Entertainment estimates.
Faced with the threat of a Chapter 7 liquidation if Trump
Entertainment's last remaining casino was shut down, Mr. Icahn
offered to finance a Chapter 11 exit for the company and its Trump
Taj Mahal with a new $20 million loan. The offer came just before
Christmas and set off a round of rewriting for Trump
Entertainment's bankruptcy proposal.
Also Friday in Dallas, a version of Sears Methodist Retirement
System Inc.'s creditor-payment plan will be up for inspection by
Judge Stacey G. Jernigan.
The Chapter 11 plan would distribute the proceeds from the
ongoing sales of Sears Methodist's retirement homes to bondholders
and other creditors.
Sears Methodist has stalking horse, or leading, bids worth more
than $60 million lined up from two bidders for four of its eight
senior-living facilities.
The bid would be subject to higher offers at a Jan. 21 auction.
Rival bids are due Jan. 19.
The sales of Sears Methodist's retirement homes are the backbone
of its creditor-payment plan, for which the nonprofit is seeking
bankruptcy-court approval.
Creditors whose payment depends on the outcome of the Jan. 19
auction include a bondholder group owed nearly $96 million and
another bondholder group owed $43 million. Based on the initial
bids, Sears Methodist estimates both bondholder groups could
recover a third or more of their claims.
-Joseph Checkler, Jacqueline Palank and Peg Brickley contributed
to this article.
Write to Tom Corrigan at tom.corrigan@wsj.com
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