LightSquared in deal to hand control to Ergen
By Nick Brown and Billy Cheung
NEW YORK (Reuters) - LightSquared, the bankrupt wireless venture owned by Phil Falcone's Harbinger Capital Partners, has reached a deal to bring the company out of bankruptcy under the control of its largest lender, Dish Network Corp (DISH.O: Quote) Chairman Charles Ergen.
Harbinger had been fighting to keep some control of LightSquared by breaking up the company, even as lawyers for LightSquared supported a plan to keep it together.
The latest deal, struck between LightSquared and its lenders, would avoid a breakup while distributing equity to lenders.
Ergen would nab a controlling 60 percent stake, and provide $1 billion of a $2.2 billion post-bankruptcy junior loan, lawyers revealed on Monday at a hearing in U.S. Bankruptcy Court in Manhattan.
LightSquared, which had promised high-speed wireless coverage across the United States, filed for Chapter 11 protection in 2012 after regulators barred it from using its wireless spectrum because of fears it would interfere with the Global Positioning System (GPS).
A source familiar with negotiations told Reuters earlier on Monday that the parties had struck a deal.
Harbinger and Ergen had been embroiled in litigation for more than a year over allegations by Harbinger that Ergen was out to wrest control of LightSquared's assets on Dish's behalf. Ergen, who had acquired about $1 billion of LightSquared loan debt, insisted the investment was only for his personal account.
The agreement comes on the heels of a second round of mediation and several unsuccessful restructuring proposals, and could spell doom for Harbinger's hopes of salvaging control. Continued...