Ergen Said to Offer $2 Billion for LightSquared Frequencies

Charlie Ergen, chairman of satellite-TV provider Dish Network Corp. (DISH), made a $2 billion bid for radio frequencies from LightSquared Inc., the bankrupt wireless-broadband company owned by Philip Falcone’s hedge-fund firm, according to people familiar with the offer.

Ergen, 60, has offered to buy the spectrum -- the frequencies used for wireless communications -- even though the Federal Communications Commission has yet to approve its use, according to the people, who asked not to be named because the deal hasn’t been shown to the bankruptcy judge. Reston, Virginia-based LightSquared filed for bankruptcy last year after regulators blocked approval to build its network on concern it would interfere with global-positioning system signals.

Obtaining LightSquared’s airwaves would help Ergen expand his wireless assets at the same time Dish is seeking to acquire mobile-phone carrier Sprint Nextel Corp. (S) for $25.5 billion. Ergen’s goal is for Dish to sell voice and Internet services to complement its TV offering.

Ergen’s bid is a so-called stalking-horse agreement, used in bankruptcy proceedings to establish a minimum price for an asset sale. A stalking-horse bid would have to be approved by the judge before being used to open an auction.

May Deadline

LightSquared would use the proceeds from selling its airwaves to pay off secured debt, according to the people. The company has until May 31 to accept the offer, which was made May 15, the people said.

A LightSquared spokesman declined to comment, while Brian Maddox, a spokesman for Englewood, Colorado-based Dish, didn’t immediately return calls and an e-mail. Neil Grace, an FCC spokesman, declined to comment.

In March, LightSquared won court approval for additional financing that included a settlement with some of its lenders. The loan gave LightSquared an additional $5 million, and in return, LightSquared agreed that its exclusive rights to file its own Chapter 11 plan would end July 15.

Dish was arranging financing last week for its Sprint proposal, which is competing with a $20.1 billion bid from Tokyo-based SoftBank Corp. (9984) Thus far Overland Park, Kansas-based Sprint hasn’t given Dish access to the detailed financial information needed to move forward with a transaction.

LightSquared and Sprint have a history together. Sprint had a network-sharing agreement with Falcone’s company before canceling it last year after LightSquared failed to get government approval for its network. LightSquared filed for bankruptcy protection two months later.

Adding Airwaves

Late last year, Dish received permission from the FCC to set up a wireless service that could compete with the largest U.S. mobile provider, Verizon Wireless, and No. 2 AT&T Inc. (T) It first asked for approval in August 2011 after paying about $3 billion for airwaves from bankrupt satellite companies DBSD North America Inc. and TerreStar Networks Inc.

Dish’s bid for LightSquared’s airwaves came less than a week after Falcone, 50, agreed to a settlement with the Securities and Exchange Commission over claims he improperly borrowed $113 million from one of his funds to pay his taxes. The funds are in the process of selling assets after Falcone agreed to be barred from the industry for two years, while his hedge-fund firm Harbinger Capital Partners LLC would pay an $18 million fine. Falcone’s two main hedge funds invested $3 billion in LightSquared, which now accounts for about 50 percent of their holdings.

Earlier this month FCC Chairman Julius Genachowski said he expects LightSquared to eventually win approval to use its airwaves. The company has looked into possible swaps of frequencies for cleaner airwaves and tighter enforcement of signal parameters in GPS devices, Genachowski said.

Tentative Go-Ahead

The FCC under Genachowski gave LightSquared a tentative go-ahead in 2011, then blocked it last year after tests showed the proposed high-speed network for as many as 260 million people would interfere with GPS units, including those that help keep aircraft from crashing into mountains.

Last month, the FCC gave LightSquared permission to experiment with sharing airwaves now used by U.S. government weather satellites and weather balloons.

Genachowski is to step down as head of the FCC, and Tom Wheeler, a venture capitalist and former lobbyist, has been nominated to replace him.

Dish rose 3.2 percent to $39.93 at the close in New York, bringing its year-to-date gain to 9.7 percent. Sprint climbed 1.4 percent to $7.39. It has increased 30 percent this year.

To contact the reporters on this story: Katherine Burton in New York at kburton@bloomberg.net; Alex Sherman in New York at asherman6@bloomberg.net

To contact the editors responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net; Nick Turner at nturner7@bloomberg.net

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