Exclusive: Falcone's wireless company running out of cash

Mon Dec 19, 2011 3:40pm EST
 
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By Matthew Goldstein

NEW YORK (Reuters) - The upstart wireless company that is being bankrolled by Philip Falcone's $5 billion Harbinger Capital Partners hedge fund could run out of money during the second quarter of 2012, according to the company's financial statement.

LightSquared, which registered a $427 million net loss during the first nine months of this year, may not be able to "continue as a going concern" unless it can raise additional capital and financing, the statement reviewed by Reuters said.

"There is a need to raise substantial capital beyond the beginning of the second quarter of 2012 in order to have sufficient liquidity," the company's statement said.

It's been no secret in the telecom world that LightSquared is in need of cash, but the financial statement paints a fairly bleak outlook for the Reston, Virginia-based company. A failure of LightSquared would be another jolt to investors in Falcone's hedge fund, which has committed more than $3 billion in equity and loan commitments to the company. Falcone gained fame after making billions in 2007 by shorting subprime mortgages.

A spokesman for LightSquared said the company "has cash through the next several quarters." A person familiar with LightSquared said the company does not need any additional money until the Federal Communication Commission rules on a company plan for dealing with potential interference issues with global positioning systems. It is not clear when the FCC will rule.

A Harbinger's spokesman was not immediately available for comment.

In July, Falcone's hedge fund loaned about $184 million to LightSquared in return for warrants that can be converted into 2.9 million shares of LightSquared stock, according to the financial statement.

New York-based Harbinger already is LightSquared's largest equity holder - owning all but a small sliver of the company.   Continued...