Philip Falcone’s LightSquared Inc. is seeking commitments today on a $2 billion to $2.5 billion loan to support the wireless provider’s exit from bankruptcy, according to a person with knowledge of the transaction.
The 12 percent payment-in-kind debt is due in three years, with the ability for a one-year extension, said the person, who asked not to be identified without authorization to speak publicly. Investors will be offered the loan at 95 cents to 97 cents on the dollar, reducing proceeds for the borrower and increasing the yield for investors.
JPMorgan Chase & Co. and Credit Suisse Group AG are arranging the financing, which is part of a plan for which LightSquared is seeking court approval for its emergence from bankruptcy. The plan, supported by Fortress Investment Group LLC, JPMorgan and Melody Capital Advisors LLC, includes at least $1.25 billion in new equity contributions, according to court papers filed Dec. 24.
The company, which sought to establish a high-speed wireless network, filed for bankruptcy in May 2012 after the Federal Communications Commission blocked its initial proposal to use wireless spectrum, concluding it would interfere with GPS navigation gear.
Falcone’s Harbinger Capital Partners LLC invested about $3 billion in Reston, Virginia-based LightSquared, which listed assets of $4.48 billion and debt of $2.29 billion in its Chapter 11 filing. Harbinger, which previously planned to submit an alternative to creditors, said Dec. 30 it will instead back LightSquared’s plan.
The case is In re LightSquared Inc., 12-bk-12080, U.S. Bankruptcy Court, Southern District of New York (Manhattan).