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Falcone Says Bankruptcy Is an Option for LightSquared

Harbinger Capital Partners Chairman and CEO Falcone
Phil Falcone, founder of Harbinger Capital Partners. Source: APCO Worldwide via Bloomberg

Phil Falcone said he may consider voluntary bankruptcy for LightSquared Inc., the broadband wireless venture majority owned by his hedge fund that has been derailed by regulators.

“There are arguments that we would be better off in bankruptcy than not,” Falcone said in an interview. “LightSquared, if I have to, I’ll put it into bankruptcy. I don’t care,” adding that he would maintain control of the Reston, Virginia-based company if it filed.

The company, which had planned to build a high-speed data network for as many as 260 million users, is struggling to survive in the wake of the Federal Communications Commission’s decision to block the service because of potential signal interference with global-positioning systems. Falcone, through his hedge fund Harbinger Capital Partners, has invested about $3 billion in the venture.

Falcone would prefer to get the government to swap his spectrum for that controlled by the U.S. Department of Defense. The 49-year-old hedge-fund manager has also been exploring signal-filtering technology as a possible remedy.

Bankruptcy is “not what I want, not what I desire, I’d rather find a different way out,” he said in the interview. Falcone is “seriously considering” bankruptcy, Reuters reported yesterday.

‘Complete the Vision’

LightSquared bondholders agreed to give Falcone a waiver not to put the company into technical default after the FCC said it planned to revoke LightSquared’s license. Falcone has a deadline of April 30 to revisit that waiver with his bondholders, who include Carl Icahn, David Tepper and Andrew Beal.

“The rationale behind a voluntary filing is to complete the vision, to complete the plan to build the network and protect the company from the creditors who are more interested in a quick flip,” Falcone said.

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