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LightSquared Seeks Permisssion To Enter $1.75B Facility

LightSquared Inc. on Tuesday asked a New York bankruptcy judge to approve its entering into a $1.75 billion working capital facility with three lenders that is intended to get the wireless communications startup back on its feet after its reorganization plan was approved earlier this year.

In a court filing, LightSquared said upon testing the market it “received a significant level of interest from potential arrangers and lenders to arrange and fund the financing.” The company is seeking court approval to enter into an engagement letter with Credit Suisse Securities (USA) LLC, Jefferies Finance LLC and Morgan Stanley Senior Funding Inc., which are the lead arrangers on the deal.

LightSquared said the financing it has secured “is necessary, appropriate, in the best interests of all stakeholders.” The request comes after LightSquared in March finally secured court approval for its Chapter 11 plan after three years of intense confrontations with its creditors.

The deal is structured so that the fee LightSquared will end up paying the three lead arrangers will depend partially upon how much the working capital facility yields, the company said in its brief. LightSquared's fees will be reduced depending upon the cost of borrowing, the brief said.

Based upon current market conditions, the financial institutions have begun marketing the facility to include a 7.75 percent interest rate above Libor, according to the brief. LightSquared said the deal maximizes its potential value and is the best option for executing its restructuring plan as quickly as possible.

“Given the size and value maximizing potential of the engagement, LightSquared further submits that its anticipated entry into and performance under the engagement letter, the payment of the fees, the reimbursement of expenses, and the provision of indemnities in connection therewith represent a sound exercise of its business judgment and are for a valid business purpose — allowing LightSquared to effectuate the plan in accordance with this court’s confirmation order and emerge from chapter expeditiously,” the company said.

A hugely promising startup backed by hedge fund magnate Philip Falcone, LightSquared sank into Chapter 11 in 2012 when the Federal Communications Commission rejected its proposed nationwide wireless network over concerns about interference with global positioning technologies.

Since then, seven restructuring proposals have fizzled, one rejected by U.S. Bankruptcy Judge Shelley C. Chapman and six tentative agreements that never gained enough creditor support to advance as lawyers debated the ultimate value of LightSquared’s spectrum assets with a renewed licensing application still sitting before the FCC.

An attorney representing LightSquared did not immediately respond to a message sent Wednesday seeking comment.

LightSquared is represented by Matthew S. Barr, Alan J. Stone, Michael L. Hirschfeld and Andrew M. Leblanc of Milbank Tweed Hadley & McCloy LLP. LightSquared’s special committee is represented by James H.M. Sprayregen, Paul M. Basta and Joshua A. Sussberg of Kirkland & Ellis LLP.

The case is In re: LightSquared Inc., case number 1:12-bk-12080, in the U.S. Bankruptcy Court for the Southern District of New York.