LightSquared Reaches Agreement With Lenders on Cash Use
LightSquared Inc. reached a final agreement to use lenders’ cash collateral after saying it might have to liquidate without the deal.
The accord gives the maker of wireless broadband technology enough money to fund operations until September 2013, Matthew Barr, a lawyer for LightSquared, told U.S. Bankruptcy Judge Shelley Chapman today. As part of the deal, LightSquared agreed to pay the lenders $6.25 million a month and let them return to court to move to end the use of cash collateral, he said.
“Once I’ve had a chance to review this, we’ll get it on the docket,” Chapman said at a hearing in Manhattan.
The lenders, which own $1.1 billion of debt in LightSquared’s “LP” unit, will allow the company to use as much as $190 million in collateral, Barr has said. Hearings were adjourned three times this week as the parties worked to broker a deal.
The LP lenders’ earlier offers were “untenable,” Barr told Chapman on June 11. The group includes Capital Research & Management Co., Appaloosa Management LP and Fortress Investment Group LLC. (FIG)
LightSquared, backed by Philip Falcone, had been in a dispute with the group since the outset of its Chapter 11 case last month. Without permission to use cash, LightSquared “would be forced to terminate its business operations and liquidate its assets,” the company said in court papers.
LightSquared separately reached an “agreement in principal” with lenders to its “Inc.” unit on a so-called debtor-in-possession loan, Barr said June 11. U.S. Bank NA is an agent to lenders to the Inc. unit, which owes $322.3 million.
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