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Centerbridge backs away from LightSquared

Reports indicate that the $3.3bn deal for the bankrupt mobile satellite firm is over, which could open the door to Dish again


Published: 18 December, 2013


It seems that private equity firm Centerbridge has dropped its $3.3bn offer to buy mobile satellite operator and would-be national LTE player, LightSquared, out of bankruptcy protection. This could open the door for Dish, which had previously made a 'stalking horse' bid of $2.2bn, to enter the race again, though LightSquared says it is exploring other alternatives.

Centerbridge cited "economic and non-economic reasons" for backing away, a LightSquared lawyer said at a hearing in Manhattan bankruptcy court, according to the Wall Street Journal.

The Centerbridge plan included a number of conditions, including FCC approval for LightSquared to build out an LTE network. Its original plan was scuppered by opposition from the GPS community, whose spectrum adjoins some of LightSquared's L-band frequencies. LightSquared has argued that it could still roll out a terrestrial network, by swapping the sensitive frequencies for others, and/or paying for filters to prevent interference with GPS services.

Dish had made an unconditional offer earlier this year, which was to be the stalking horse for a bankruptcy auction, but that was called off at the eleventh hour last week when the Centerbridge deal emerged. However, the pay-TV firm could make another play for LightSquared, which it has targeted in order to add its spectrum to its own S-band holdings. These are at a safe distance from GPS, but Dish has said they are insufficient to support its national LTE-Advanced build-out plan by themselves. However, it might be able to use only the non-controversial areas of LightSquared's spectrum and still have enough for a first wave of roll-out, enabling it to proceed quickly before the fate of the other frequencies was decided.

The WSJ noted that, while the deadline for Dish's bid has passed, neither side has officially ended it. That bid was made by the investment vehicle of Dish chairman Charlie Ergen, together with a group of LightSquared debtors. Ergen had already privately acquired about $1.1bn of LightSquared debt and proposed a reorganization plan.

However, LightSquared has been in dispute with the lenders' group since the beginning of its Chapter XI case, leading Ergen to complain that Dish was being blocked from having a "fair shake". Last week, he lost an attempt to end a lawsuit alleging he acted improperly in buying LightSquared debt. LightSquared and Harbinger allege that Ergen formed a "secret special purpose vehicle," SP Special Opportunities, to buy the debt because this process was "improper", given that Dish and Ergen's other company, Echostar, compete with LightSquared (a clause in the latter's credit agreement bars rivals from owning its debt).

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