LightSquared Sees Movement From Washington Amid Few Signs

Regulators show few signs they’re ready to grant the approvals LightSquared Inc. needs to emerge from bankruptcy, as investor Philip Falcone’s fight to keep control of the wireless provider approaches a decisive moment.

Though Falcone’s Harbinger Capital Partners LLC in a Jan. 2 court filing said regulatory approval of a revised airwaves-use plan is “within reach,” agencies have misgivings and haven’t set a schedule for resolving them, according to two people familiar with the deliberations. They spoke on condition of anonymity because the review isn’t public.

The regulators’ timetable is crucial because Falcone, 51, has funding from his creditors only through Jan. 31. He needs a judge to approve a refinancing plan, which in turn depends on clearance from airwaves regulators. Dish Network Corp. (DISH) yesterday asked in U.S. Bankruptcy Court to withdraw its competing reorganization plan, and with it would go the prospect of $2.2 billion to keep LightSquared afloat.

“I’m not aware of any developments that would make the FCC disposed to approving the project now after technical problems,” Senator Charles Grassley, an Iowa Republican critical of the Federal Communications Commission’s initial support of Falcone’s original plan, said in an e-mail.

Falcone’s dream of building a national wireless-broadband network has been near a standstill. U.S. authorities blocked it in February 2012 over concerns LightSquared’s emissions would interfere with navigation gear using signals from the global positioning system.

GPS Interference

LightSquared, based in Reston, Virginia, submitted its revised plan in September 2012, saying it would give up some operations in airwaves near those used by GPS.

U.S. officials remain concerned that LightSquared’s mobile handsets could interfere with GPS, said two people familiar with agencies’ review of the revised airwaves-use plan.

The Transportation Department, whose concerns that the LightSquared network could affect airliner navigation helped kill the company’s original plan, is withholding assent from the Interdepartment Radio Advisory Committee, a body within the National Telecommunications & Information Agency that offers technical advice on frequency assignments, the people said.

NTIA, the principal adviser to President Barack Obama on federal airwaves use, shares authority over frequency assignments with the FCC.

Delay Sought

Juliana Gruenwald, a spokeswoman for the NTIA, a Commerce Department arm, and Justin Cole, an FCC spokesman, declined to comment. Ryan Daniels, a Transportation Department spokesman, referred questions to Gruenwald’s agency.

The National Oceanic and Atmospheric Administration, which would share airwaves with LightSquared as part of the mobile provider’s revised plan, is studying the plan, David Miller, a spokesman for the agency that is part of the Commerce Department, said in an e-mail.

Michael Tucker, a spokesman for LightSquared, and Eric Andrus, a spokesman for Harbinger, declined to comment. LightSquared in September told the FCC its operations don’t pose any risk of interference to GPS and further evaluation isn’t needed.

Interference concerns haven’t been resolved and the FCC shouldn’t act on LightSquared’s request without conducting a “transparent” rule-making, the GPS Innovation Alliance representing companies including Deere & Co., Garmin Ltd. and Trimble Navigation Ltd., said in a Dec. 23 filing at the FCC. The companies, which make and use GPS gear, opposed LightSquared’s initial plan.

FCC Meetings

U.S. Bankruptcy Judge Shelley Chapman delayed a hearing on LightSquared’s plan as she conducts the trial that began yesterday on Falcone’s lawsuit claiming Dish Chairman Charlie Ergen bought LightSquared debt on the sly.

Ergen, who is positioning Dish to enter the wireless business, has said his purchases of the debt were smart, not illegal. Dish dropping its offer for LightSquared’s airwaves would create “a quandary” because without the Ergen bid, LightSquared is in danger of ceasing operation due to a lack of cash, Chapman said in an earlier session.

LightSquared’s reorganization effort is backed by $2.5 billion in exit financing from JPMorgan Chase & Co., Fortress Investment Group LLC and Melody Capital Advisors LLC. The bid was conditioned on regulatory approvals by the end of 2014, according to their court filing.

The offer followed a Dec. 19 meeting with FCC Chairman Tom Wheeler, according to a filing at the agency. Those attending included LightSquared Chief Executive Officer Doug Smith, JPMorgan Managing Director Patrick Daniello, and Fortress co-chief Investment Officer Dean Dakolias, according to the filing.

‘Tough Odds’

FCC aides didn’t offer a date for concluding proceedings, Reed Hundt, a former agency chairman and attorney representing LightSquared who also attended the meeting, said in an interview.

Hundt and a lawyer for Centerbridge Partners LP, a private equity firm that focuses on distressed securities, met with FCC officials on Dec. 5 and Dec. 13, according to agency filings. Centerbridge, which was said to have considered a $3.3 billion offer for LightSquared, hasn’t produced a bid in bankruptcy court.

LightSquared appears to have made progress with some federal agencies, Jeffrey Silva, a Washington-based analyst for Medley Global Advisors LLC, said in an interview.

“It’s against tough odds, but it’s not out of the realm of possibility” that the company will win its Washington fight, Silva said.

The case is In re LightSquared Inc., 12-bk-12080, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporters on this story: Todd Shields in Washington at tshields3@bloomberg.net; Tiffany Kary in New York at tkary@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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