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Cable Technology Feature Article

December 27, 2013

LightSquared May Be Able to Work out of Bankruptcy Protection under New Plan

By Ed Silverstein, TMCnet Contributor

LightSquared may be finding a way to work itself out of bankruptcy protection and avoid being sold to Dish Network.

The wireless communications company is facing many challenges after worries about interference messed up a spectrum plan. Last year, the FCC blocked LightSquared's national broadband 4G LTE (News - Alert) network proposal because of interference and related problems associated with GPS navigation. In light of these problems, last year LightSquared filed for bankruptcy.

Now, LightSquared has a plan, with financing from Fortress Investment Group and others, to work out of bankruptcy. Under the plan, LightSquared gets “$2.75 billion in fresh loans and at least $1.25 billion in equity investment from private equity firms Fortress and Melody Capital Advisors LLC, as well as JPMorgan Chase & Co and Harbinger Capital Partners (News - Alert),” Reuters reported based on recent documents filed in Bankruptcy Court in New York City. The $4 billion plan made up of both debt and equity would need to be approved by the FCC (News - Alert) and the bankruptcy court. The bankruptcy court will hold a hearing on LightSquared's plan on Jan. 9. US bankruptcy judge Shelley C. Chapman will likely review the new plan, too.

Last year, Dish was the only bidder for the company under an earlier proposal. That company had a $2.2 billion offer. Dish could still try to outbid the new investors, Reuters speculated.

Dish wants to buy other spectrum and may also try to buy T-Mobile (News - Alert) USA. Sprint also wants to acquire T-Mobile.

Earlier this month, Centerbridge Partners LP dropped a $5 billion plan to acquire LightSquared, according to The Wall Street Journal.

Also, there has been a struggle for LightSquared between Phil Falcone, a hedge fund manager, and Charlie Ergen, Dish Network’s chairman. Falcone is LightSquared’s largest single shareholder. Under the new plan, Falcone would “retain some of the control he has sought,” according to a report from The New York Times. LightSquared wanted to become a rival broadband network to AT&T and Verizon (News - Alert), The Times reported.

Edited by Cassandra Tucker

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