Joel R. Glucksman
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U.S. wireless communications firm LightSquared is seeking to exit formal bankruptcy proceedings after securing financing from private-equity firms Fortress Investment Group LLC and Melody Capital Advisors LLC.
The company filed its bankruptcy exit plan with the U.S. Bankruptcy Court of Manhattan in an effort to quickly end proceedings and avoid a sale to highest bidder Dish Network Corp, Reuters reported. Under the agreement made with investors, LightSquared would receive $2.75 billion in loans and roughly $1.25 billion in equity investment from Fortress and Melody Capital, as well as JPMorgan Chase & Co and Harbinger Capital Partners. The latter investor is currently LightSquare’s controlling shareholder, Reuters explained.
If the plan is approved, it will allow the company to avoid a sale to Dish Network, which earlier in the year made a $2.2 billion offer to purchase the firm’s assets. However, LightSquared found the amount and the terms of the sale insufficient, and began seeking other alternatives. Although it is unclear whether Dish will attempt to outbid the new investors, the company has been purchasing billions of dollars worth of wireless airwaves in order to dominate the satellite television industry and is showing no signs of slowing down.
LightSquared filed for Chapter 11 bankruptcy protection in 2012 after the Federal Communications Commission blocked its plan for a 4G LTE terrestrial wireless network over fears that it would interfere with GPS navigation, Reuters reports.
While LightSquared has secured exit financing and funds to reorganize the company, the plan is still subject to court approval under the bankruptcy law. Additionally, the proposed plan and LightSquared’s license application must also be approved by the FCC, a process that could take months. In the interim, Melody has agreed to extend the company a $285 million loan.
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