LightSquared Nails Down $121M In DIP Financing

LightSquared Inc. won approval Thursday from a New York bankruptcy court for $120.6 million in post-petition financing, the latest step in the wireless networking company's drawn-out attempt to reorganize its finances.

LightSquared and its affiliates, as debtors and debtors in possession, sought approval Monday from U.S. Bankruptcy Judge Shelley C. Chapman for a sixth replacement senior secured post-petition financing to the debtors' affiliate LightSquared LP. The latest financing is up from $97.3 million in the fifth post-petition facility, according to documents.

The debtors argue that they need post-petition financing because they have been funding the business and the Chapter 11 bankruptcy cases through the use of prepetition collateral and proceeds of a fifth replacement LP DIP facility.

Lenders include Capital Research & Management Co., Cyrus Capital Partners LP, Intermarket Corp., Solus Alternative Asset Management LP, Fortress Credit Corp, Aurelius Capital Management LP and SP Special Opportunities LLC.

LightSquared filed for Chapter 11 in 2012 after the Federal Communications Commission declined to approve its wireless network. The company sought to build a nationwide wireless-phone network using airwaves previously reserved for satellite use, but regulators were concerned LightSquared's network would interfere with GPS signals used by military and law enforcement.

The company's rollercoaster Chapter 11 took another twist earlier this month when controlling equity holder Harbinger Capital Partners LLC offered up a bankruptcy exit plan to split the wireless venture in two and reorganize each estate separately, a break from the debtor's plan to stay unified.

The emergence of the competing plans dashed hopes of a global resolution that seemed in reach when LightSquared announced an agreement in principle last month with Dish Network Corp. Chairman Charlie Ergen, its largest prepetition secured creditor and most vocal opponent throughout the bankruptcy.

The new Harbinger-sponsored plan applies only to the debtor's so-called Inc. estate, which is distinct from and has different lenders than the LightSquared LP unit where most of its valuable spectrum assets reside.

In its own reorganization plan, LightSquared and a group of LP lenders envisioned keeping the estates consolidated, in line with their long-held view that doing so will yield the most value for creditors. A third plan may yet emerge from Mast Capital Management LLC, a creditor in the Inc. estate.

LightSquared is represented by Matthew S. Barr, Alan J. Stone, Michael L. Hirschfeld and Andrew M. Leblanc of Milbank Tweed Hadley & McCloy LLP.

Harbinger is represented by David M. Friedman, Adam L. Shiff, Daniel A. Fliman and Matthew B. Stein of Kasowitz Benson Torres & Friedman LLP.

Ergen and SPSO are represented by Rachel Strickland, James C. Dugan and Matthew Freimuth of Willkie Farr & Gallagher LLP.

The LightSquared 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.

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