Falcone’s LightSquared Considers Bankruptcy

HARBINGERPhil Falcone’s Harbinger Capital Partners owns the lion’s share of LightSquared, the wireless venture that has been struggling to receive federal approval to implement a mobile technology that uses global positioning systems to provide voice and data services. His fund has invested over $3 billion in the company so far (roughly 60% of its money) and seen next to nothing in returns. Now that the value of LightSquared has been revalued to just a little over half a billion dollars, Falcone’s Harbinger is losing even more. It is down 47% thanks largely to its investment in the wireless company.

For LightSquared’s part, it is trying to reduce its costs while it tries to get the necessary approvals. The company recently announced it is laying off roughly half of its 330-member staff. Getting approval will be tricky – several government entities, including the Space-Based Positioning, Navigation and Timing National Executive Committee, have recommended against LightSquared’s technology – and the company has already defaulted on some of its debt obligations. Reuters reports that “LightSquared’s creditors, which include hedge funds led by Carl Icahn and David Tepper, are weighing whether to declare the company to be in default on a $1.6 billion loan.” With all this going on, LightSquared is sort of a sinking ship.

Falcone recently said that filing for bankruptcy is one of the options he is considering for LightSquared. Falcone explained that “a bankruptcy would allow the company time to find a way to deal with communications interference issues that have arisen with the planned buildout of a nationwide wireless broadband network,” according to Reuters. “Falcone said a bankruptcy would not necessarily wipe out the equity holders of LightSquared because the spectrum it owns retains value.” Creditors have told Falcone that he has until the end of the month to make a deal or the company could be forced into bankruptcy. “Falcone said he is telling his hedge fund investors that all is not lost,” says Reuters. “He is confident the value of LightSquared’s operating spectrum will rise again once it is able to come up with a plan for resolving the interference issues.”

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!