Exclusive: Icahn sells LightSquared debt, creditors extend talks: sources

Mon May 7, 2012 5:15am EDT
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By Sinead Carew and Matthew Goldstein

NEW YORK (Reuters) - Billionaire investor Carl Icahn has sold his $250 million debt holdings in Philip Falcone's telecom start-up LightSquared MOSAV.UL, while Falcone continues to negotiate with creditors to avoid a debt default, according to sources familiar with the matter.

News of Icahn's debt sale comes as remaining creditors agreed to a second week-long extension until May 14 of their talks with Falcone about reducing his firm, Harbinger Capital Partners' 96 percent equity stake in LightSquared.

One hedge fund representative said some constructive progress has been made in talks that began in earnest between LightSquared and its creditors two weeks ago over a potential default on $1.6 billion of LightSquared debt.

Meanwhile, Icahn, who was seen as one of the leaders in pushing for Falcone to reduce his role in LightSquared, appears to have made a big profit on the sale, according to the sources familiar with the matter.

The investor on Thursday sold his debt for about 60 cents on the dollar after buying the position when it was trading in the low 40-cents range only months before, several people familiar with the matter said.

Two sources familiar with it said the buyer of Icahn's debt was Sound Point Capital, a small investment firm led by Stephen Ketchum, who formed the company in 2009.

Ketchum previously worked as an investment banker and one of his clients was Charlie Ergen's satellite company. Similar to LightSquared, Ergen's Dish Network (DISH.O: Quote) owns wireless airwaves but has not received regulatory approval to use the spectrum to build a high-speed wireless network.

Ketchum was not immediately available for a comment. Nor was a representative for Icahn. A spokesman for Harbinger was not immediately available to comment on the extension.   Continued...

File photo of investor Carl Icahn at the New York Stock Exchange. REUTERS/Chip East