Ergen Group May Drop LightSquared Bid, Lender Lawyer Says
An entity owned by Charlie Ergen, chairman of Dish Network Corp. (DISH), may withdraw its $2.22 billion offer to buy the wireless spectrum of Philip Falcone’s LightSquared Inc. over a technical matter, a lawyer said.
The lawyer, Thomas Lauria, who represents a group of LightSquared lenders with plans to reorganize the company around an auction led by the bid, told U.S. Bankruptcy Judge Shelley Chapman in Manhattan court today about Dish’s concerns.
“Dish has raised a technical issue they believe is serious and if not fixed would impair utility of LightSquared’s spectrum,” Lauria said. He said that while LBAC, the Ergen entity offering to buy the spectrum, hasn’t yet withdrawn its bid, it has the right to do so and is considering the move.
The lenders are still in talks with LBAC and Dish, and they believe LightSquared can be reorganized through an auction that sells to another party if the Dish affiliate drops out, Lauria said.
LightSquared filed for bankruptcy in 2012 after the Federal Communications Commission blocked its initial proposal to use wireless spectrum, saying it would interfere with satellite-based navigation gear.
Since the filing, LightSquared has been battling Ergen to retain control of its assets, which it has said are worth as much as $10 billion. The Reston, Virginia-based company has said it’s close to getting the regulatory approval necessary for it to reorganize on its own terms.
Dish, based in Englewood, Colorado, fell 1.5 percent to $57 at 10:49 a.m. in New York.
Chapman was scheduled to hear an update in court today on a lawsuit that LightSquared brought against Ergen over how he bought debt in the company.
“We have a quandary,” Chapman said. She said that without the Ergen bid on the table, the company is in danger of ceasing operation due to a lack of cash.
Rachel Strickland, a lawyer for the Ergen entities, told Chapman her clients may withdraw their offer tonight, when the last in a series of deadline extensions runs out.
“To the extent there is a breakdown in communication, it is a possibility LBAC will exit the agreement tonight,” Strickland said.
The case is In re LightSquared Inc., 12-bk-12080, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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