LightSquared splits $3 billion exit financing

Wed Jul 3, 2013 2:24pm EDT
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By Billy Cheung

NEW YORK (Reuters) - Wireless broadband communications company LightSquared Inc MOSAV.UL is splitting its proposed $3 billion senior secured exit term loan into a $2 billion first-lien loan and $1 billion second-lien tranche, sources told Thomson Reuters LPC. The loan originally consisted of a single tranche.

Proceeds are to fund the company's emergence from bankruptcy. Jefferies is arranging the first lien portion. Lender commitments are due at 4 p.m. July 9.

The now $2 billion first-lien portion will offer coupons payable in cash and in kind.

As reported, price guidance on the four-year first-lien tranche is set at LIB+650 with a 1.5 percent Libor floor. Pricing now includes an additional 3 percent payable-in-kind coupon, bringing the total coupon to 11 percent, said sources. The loan is offered at a discount price of 98.5, as proposed at launch.

Lenders will receive upfront warrants, immediately vested, for 10 percent of fully diluted ownership. The company had previously offered warrants amounting to 5 percent of fully diluted ownership.

Jefferies declined to comment on the transaction.

The loan contains the following ticking fees until creditors fully fund the loan: 0 percent of the spread for the first 30 days, then 50 percent of the spread for the next 60 days and 100 percent of the spread thereafter.

If LightSquared fails to secure regulatory approval on certain disputed network spectrum, lenders would not fund the exit loans.   Continued...