LightSquared Lender Group Owns $1.1 Billion in Unit Debt

A group of LightSquared Inc. lenders that objected to the wireless-network provider’s use of cash collateral owns $1.1 billion of its secured debt and includes Capital Research & Management Co. and Appaloosa Management LP.

The debt is part of a $1.7 billion loan to LightSquared’s “LP” unit, according to papers filed May 18 in bankruptcy court in Manhattan. U.S. Bankruptcy Judge Shelley Chapman at a May 16 hearing asked the lender group, represented by law firm White & Case LLP, to disclose its members and holdings.

“Today it really isn’t a business. There’s a vision of a business,” Thomas Lauria, a lawyer for the ad hoc lender group, said of LightSquared on May 16. Lenders are concerned that the company’s assets and cash flow aren’t enough to support the LP unit’s debt, he said.

LightSquared, based in Reston, Virginia, filed for bankruptcy May 14, saying it will seek a resolution with U.S. regulators who thwarted the company’s plan to deliver high-speed wireless to as many as 260 million people over concerns that it interferes with GPS networks.

Capital Research owns $331.2 million in LightSquared debt and Appaloosa owns $257.3 million in debt, according to court papers. The other holders are Fortress Investment Group LLC, Knighthead Capital Management LLC, Redwood Capital Management LLC, Silver Point Capital LP, Solus Alternative Asset Management LP and Cyrus Capital Partners LP. The group also owns some preferred securities, according to court papers.

Cash Management

Chapman urged LightSquared to reach an agreement with lenders on the cash collateral at the May 16 hearing. She also approved LightSquared’s request to manage its $15 million in cash on hand.

LightSquared listed assets of $4.48 billion and debt of $2.29 billion as of Feb. 29 in its Chapter 11 filing. The filing followed intense negotiations with creditors, who had requested that the company’s backer, Philip Falcone, step aside. Falcone and the current management team will remain with the company, Terry Neal, a LightSquared spokesman, said May 14.

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

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