LightSquared plan to repay Dish chairman goes before U.S. judge
By Nick Brown NEW YORK (Reuters) - Bankrupt LightSquared, after three years of litigation with creditors, on Thursday will seek U.S. court approval of a mostly consensual plan to end its bankruptcy and repay in full its largest creditor, Dish Network Corp Chairman Charles Ergen. LightSquared's bankruptcy is being closely watched because its main asset, wireless spectrum, is considered very valuable. Just how valuable it is, and what it can be used for, has been fiercely debated among stakeholders, and the bankruptcy will determine who ultimately controls it. LightSquared, the wireless venture owned by Phil Falcone's Harbinger Capital Partners, entered bankruptcy in May 2012 when the Federal Communications Commission revoked its spectrum license over concerns of GPS interference. Since then, there has been a parade of failed restructuring plans and litigation between the company and Ergen over the legality of his purchase of a huge chunk of LightSquared loan debt. But on Thursday, LightSquared will present a plan to give Ergen what he has long demanded: repayment of his $1 billion claim, in full, in cash, and with interest - a $1.5 billion tab. LightSquared had accused Ergen of infiltrating its capital structure to effect a Dish takeover. Ergen insisted the investment was personal. Ergen made more enemies than friends in the case by refusing to accept haircuts on his debt, but his insistence may pay off. He stands to make a huge profit if Judge Shelley Chapman, in Manhattan bankruptcy court, approves the plan. The restructuring is premised on a $1.515 billion financing commitment from Jefferies Finance LLC, who would pocket a $174 million fee for arranging the deal. Harbinger would retain 44 percent of LightSquared's equity, but cede voting control. Centerbridge Partners and Fortress Investment Group would own a combined 34 percent of the equity. JPMorgan Chase & Co would own LightSquared's Inc unit, and the hefty tax benefits derived from that unit's net operating losses. In a hectic 24-hour period last week, a creditor faction led by Solus Alternative Asset Management proposed a plan under which they would take a chunk of equity, only to be trumped hours later when LightSquared unveiled the Jefferies-backed plan. Ergen is likely to support LightSquared's plan, but may not be able to say so aloud, court records show. He initially signed onto Solus' plan, which would have paid some of his claim in cash, and is barred under that agreement from openly supporting any other plan. (Reporting by Nick Brown; Editing by Bernard Orr)
