Coalition to Save Our GPS Clips
April 6, 2012
A front page article in today’s Washington Post reports that Philip Falcone accused the FCC in an interview of bowing to special interests that could have been hurt by LightSquared’s plans, noting that the company could soon file for bankruptcy.
· “We were ready to put the shovel in the ground, but they pulled the rug out from under us,” Falcone said. Lobbyists, he added, “have a tremendous amount of power, and I was shocked by how regulators responded to that pressure.”
· “We don’t pick sides,” FCC general counsel Austin Schlick said. “Our decision-making here, as on other issues, will continue to be based on the record and guided by law, engineering and settled policies that seek to remove regulatory barriers to broadband while avoiding harmful interference.”
· “The message to investors and other businesses is that if this couldn’t work, what can?” said Jeffrey Silva, an analyst at the Medley Global Advisors research firm. “When this came out of the box, they had all the right licenses, and there was no good reason to believe it wasn’t on solid ground.”
· “This is capital I raised and put into LightSquared based on a license we got and based on rules and regulations,” Falcone said. “I did everything I was supposed to do.”
LightSquared issued a short statement from Falcone yesterday, clarifying earlier comments about a possible bankruptcy for the company:
· "While no decision has yet been made, the rationale behind a voluntary filing would be to give us the necessary time to continue with our vision, build the network and protect the company from creditors who are more interested in a quick flip."
The New York Post reported that Falcone’s comment about creditors interested in a “quick flip” was likely directed at a group of creditors led by Carl Icahn. The article notes that creditors held a conference call yesterday to discuss the situation according to sources. It also notes that experts predict that Falcone will make a decision ahead of an April 20 payment deadline the company has with Inmarsat.
A Communications Daily article quotes industry analysts on what a bankruptcy could mean for LightSquared.
· Tim Farrar, president of TMF Associates, said moving toward a bankruptcy is unlikely to change how the FCC will rule on LightSquared’s proposal. Bankruptcy allows LightSquared "to reduce its spending levels and preserve its resources, which is what they'll need to do to fund what will be a lengthy litigation battle."
· Pressure from creditors "may have animated Falcone to concede at this time a bankruptcy option he heretofore has publicly refused to put on the table as he contemplates possible regulatory alternatives and legal action," Medley Global Advisors analyst Jeff Silva wrote investors. "We do not believe that LightSquared's chances for regulatory recovery are good," Silva said: As long as there's a GPS interference issue with LightSquared's L-band frequencies, "the value of the company's spectrum asset will likely remain diminished."
Several outlets continue to report that Falcone said he is considering seeking bankruptcy protection for LightSquared, including: Total Telecom
, Slash Gear
, All Things Digital
, Space News
, The Kansas City Star
, CED Magazine
, Daily Finance
, Light Reading
, AOPA Pilot
, Financial Times
, Helicopter Association International
, DSL Reports
, CNN Money
and the Washington Business Journal.
A cite list and links to the full text of these and other articles follow.
1. Total Telecom, Falcone says bankruptcy possible for LightSquared, By Greg Bensinger, Dow Jones Newswires, Thursday 05 April 2012
2. Slash Gear, LightSquared on the brink as Falcone considers bankruptcy, Shane McGlaun, Apr 5th 2012
3. All Things Digital, Next Chapter in LightSquared Saga Could Be Chapter 11, APRIL 5, 2012 AT 5:00 AM PT, By Ina Fried
4. Space News, Thu, 5 April, 2012 | Submitted by: Reuters, Falcone mulls voluntary bankruptcy for LightSquared [Reuters]
5. FINalternatives, Falcone Mulling Bankruptcy For LightSquared, Apr 5 2012 | 12:21pm ET
6. Kansas City Star, Posted on Thu, Apr. 05, 2012 11:56 AM
7. CED Magazine, Falcone: Bankruptcy a maybe for LightSquared, Thu, 04/05/2012 - 1:13pm Maisie Ramsay, Wireless Week
8. Daily Finance, This Network Looks Ready for a Funeral, By Anders Bylund, The Motley Fool, Posted 1:40PM 04/05/12
9. Light Reading, LightSquared Director Considers Bankruptcy, APRIL 5, 2012, Sarah Reedy
10. The Telegraph (UK), Inmarsat raises $200m in bond issue, By Graham Ruddick7:54PM BST 05 Apr 2012
11. AOPA Pilot, ‘Bankruptcy’ may loom for LightSquared, By Dan Namowitz, 4/5/2012
12. CNET, Lights dim further on LightSquared, The company now faces possible bankruptcy as its options for survival dwindle and the one agency that could save it focuses on other spectrum-related matters, by Marguerite Reardon April 5, 2012 12:29 PM PDT
13. Financial Times, April 5, 2012 8:37 pm, LightSquared bankruptcy takes step forward, By Dan McCrum and Paul Taylor in New York
14. Helicopter Association International, Posted Thursday, April 05, 2012, Posted by NStaff, LightSquared Considering Bankruptcy
15. PR Newswire, Falcone Comments on Rationale for Recommending to Board Voluntary Chapter 11 as One of Several Options for LightSquared, By LightSquared Inc, Published: Thursday, Apr. 5, 2012 - 9:25 am
16. DSL Reports, LightSquared Ponders Bankruptcy, No Product, No Waiver, No Future, No Chance, by Karl Bode, 4/5/2012
17. The Washington Post, Politics soured a $14 billion bet, cellular investor says, By Cecilia Kang, Friday, April 06, 1:53 AM
18. BGR, LightSquared considering bankruptcy after being derailed by regulators, By: Dan Graziano | Apr 5th, 2012
19. New York Post, Phil: No ‘quick flip’, Falcone, Icahn spar over LightSquared, By KAJA WHITEHOUSE, Last Updated: 12:16 AM, April 6, 2012, Posted: 11:39 PM, April 5, 2012
20. CNN Money, LightSquared Considers Bankruptcy, Attempt To Become Fifth Wireless Carrier Failing, By David Goldman, POSTED: 1:01 pm EDT April 5, 2012
21. COMMUNICATIONS DAILY, April 06, 2012 Friday, SATELLITE, SECTION: SATELLITE, LENGTH: 287 words
22. Washington Business Journal, April 5, 2012 Thursday, Phil Falcone says bankruptcy possible for LightSquared, BYLINE: Staff, LENGTH: 93 words
***Excerpts/Links to Full Text of Articles***
Hedge fund manager says would-be LTE wholesaler has enough cash to see it through the year.
Hedge fund manager Phil Falcone said he is considering seeking bankruptcy protection for his wireless network company LightSquared Inc., a venture that has consumed billions of dollars from his funds and has become a difficult sticking point with his investors.
A bankruptcy filing is "one of the options I am considering," Falcone said in an e-mail, saying it's the "best way" for him to maintain control of the company."Spectrum value does not decrease in bankruptcy," he said.
Falcone began amassing spectrum--or rights to use the nation's airwaves -- last decade in an ambitious plan to build a nationwide, high-speed network from scratch. But the plan hit a roadblock when the U.S. military and others complained that the planned service would disrupt global positioning system equipment.
The threat to LightSquared became acute earlier this year, when the Federal Communications Commission said it planned to revoke a waiver allowing the company to operate a ground-based mobile network using airwaves designated for satellite use. The FCC said tests showed the network would interfere with GPS signals.
Hedge fund manager Philip Falcone had big dreams for LightSquared. The original plan was for the company to provide wireless LTE broadband using frequencies very near those that GPS devices rely on. The idea sounded good at first and things are progressing rapidly until LightSquared came to the point where testing to be sure LightSquared devices wouldn’t interfere with GPS begun.
It was determined that LightSquared posed serious interference with most GPS devices and things went downhill quickly. Falcone has now admitted that he is seriously considering filing for voluntary bankruptcy for the company. Falcone’s hedge fund Harbinger Capital Partners is the majority partner in LightSquared.
After failing in its bid to launch a wholesale wireless network, LightSquared may be headed for a bankruptcy filing.
Chief backer Phil Falcone acknowledged the possibility in several interviews on Tuesday, including an email to The Wall Street Journal.
“Spectrum value does not decrease in bankruptcy,” he said in the email. Falcone earlier mentioned the possibility of a bankruptcy filing to Reuters.
Hedge fund manager Philip Falcone told Reuters in an April 4 interview that he is "seriously considering" filing for bankruptcy for LightSquared, the struggling satellite mobile broadband startup that had its provisional operating license revoked in February after tests showed that its terrestrial network would interfere with GPS signals.
"Falcone said a bankruptcy is one of several options he is considering as he tries to find a way to salvage the company, which reported a $427 million net loss during the first nine months of 2011, and keep its creditors at bay.
"He said a bankruptcy would allow the company time to find a way to deal with communications interference issues that have arisen with the planned buildout of a nationwide wireless broadband network.
Harbinger Capital Partners' Philip Falcone has changed his tune on a bankruptcy filing for the wireless Internet venture his hedge fund has backed with some $3 billion.
Falcone yesterday told Reuters that he is "seriously considering" a voluntary bankruptcy filing for LightSquared, among other options to save the troubled company. The Federal Communications Commission earlier this year said it would not approve the deployment of LightSquared's planned network, citing interference with global positioning systems.
Falcone has previously said that bankruptcy was "clearly not on our table."
LightSquared's troubles are to blame for a 47% loss for Harbinger, which has about 60% of its assets invested in the company, last year, and another 29.6% drop this year.
The company is mulling a lawsuit against the FCC to overturn its decision.
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 told Bloomberg News. “LightSquared, if I have to, I’ll put it into bankruptcy. I don’t care,” adding that he would maintain control of the Reston, Va.-based company if it filed.
The company, which had planned to build a high-speed data network for as many as 260 million users through a partnership with Overland Park-based Sprint, 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.
The hedge fund backing LightSquared may have the struggling company filing for bankruptcy, according to a report.
LightSquared has already defaulted on payments, stopped building its network and laid off 45 percent of its workforce as it works to find a way to advance its wireless plans against opposition from the FCC, NTIA and other government agencies.
Now, the manager of the Harbinger Capital Partners hedge fund that has invested billions in LightSquared told Reuters that bankruptcy is one of several options he is considering.
Philip Falcone said to the publication that bankruptcy could be the "best way" for him to keep control of LightSquared, but he had "no timing in mind" for such a move. LightSquared has enough funding for the remainder of the year, and a bankruptcy filing would not affect the value of its spectrum, he said.
LightSquared and Harbinger did not immediately reply to requests for comment.
Harbinger Capital chief Phil Falcone didn't make his billions by throwing good money after bad. As much as he would like to make money on the $3 billion Harbinger has invested in LightSquared, Falcone is ready to cut bait and go home. It's time to stop pouring money and lawyers into a bottomless hole.
Falcone obviously doesn't want to put the innovative mobile network builder into bankruptcy, but he'll go there if there's no other way out. "There are arguments that we would be better off in bankruptcy than not," he told Bloomberg. It may be the best way to control the company as the proposed business model flames out, he clarified to the Wall Street Journal: "Spectrum value does not decrease in bankruptcy."
That may be true, but LightSquared's particular haul of radio licenses comes with some unusual challenges that could limit their commercial value. Originally meant only for low-power satellite signals, LightSquared wanted to repurpose the spectrum to include a network of land-based 4G LTE cell towers. The company signed a long-term supply deal with Sprint Nextel (NYS: S) as the third-largest mobile operator sought to move away from its codependence with Clearwire (NAS: CLWR) . But that plan fell through as the FCC found the proposed network trampling all over neighboring GPS signals.
LightSquared may think it's too important to fail, but it's burning through cash as it works to get its network running. That's partly why Harbinger Capital Partners LP CEO Philip Falcone says he's seriously considering filing a voluntary bankruptcy for the flailing Long Term Evolution (LTE) wholesaler.
Falcone told Reuters on Wednesday that a voluntary Chapter 11 filing is one of the options he's considering for LightSquared, adding in a statement on Thursday that doing so would give it "necessary time to continue with our vision, build the network and protect the company from creditors who are more interested in a quick flip."
But, no decision has been made for the company yet, according to the hedge fund manager and majority owner.
The satellite operator Inmarsat has raised $200m (£127m) in a bond issue as an US telecommunications group that owes the company millions of pounds considers entering bankruptcy protection.
Inmarsat, which provides maritime communications, said in a statement on Thursday that the funds raised from the note sale will be used for "general corporate purposes".
The bond issue was completed just a day after hedge fund manager Philip Falcone said he is "seriously considering" filing a voluntary bankruptcy for LightSquared, Inmarsat's US partner.
LightSquared is building a US mobile broadband service with Inmarsat's spectrum but has failed to pay the British company instalments due this year of $56.3m and $29.6m.
Inmarsat says it "remains in discussions" with the company about the future of the partnership but "cannot provide any assurance" that the talks will lead to it receiving the payments.
LightSquared, the capital venture whose plan to build a wireless network imploded because its technology blocked GPS signals, may file for bankruptcy, said published reports.
Several news organizations reported this week that the hedge-fund-financed company, of Reston, Va., has until April 30 to persuade bondholders not to pull the plug, despite big losses in 2011 and a Federal Communications Commission order in February revoking the network’s conditional network approval.
Philip Falcone, manager of the hedge fund that has invested about $3 billion in LightSquared, said that a “voluntary bankruptcy” might be a way to keep the company alive in a bid to complete the network, reports said. He was also reported looking into signal-filtering technology to solve interference problems.
The Reuters news service reported that creditors of Falcone’s Harbinger Capital Partners might force LightSquared into bankruptcy if he cannot forge a deal by the end of April. The report said several other hedge funds were considering holding LightSquared in default of a $1.6 billion loan.
A year ago, hedge fund manager Philip Falcone's LightSquared offered the Federal Communications Commission a huge opportunity to satisfy some of its most lofty wireless broadband goals. Today, the company is facing possible bankruptcy and only the slimmest chance of actually building its network, leaving policy makers in Washington focusing on alternatives.
Earlier this week, Falcone, whose hedge fund Harbinger Capital is the largest stakeholder in LightSquared, told Reuters that bankruptcy protection is one of several options he is considering as he tries to keep the company alive. LightSquared, which has been battling the GPS industry over claims that its network interferes with aviation and navigation systems, lost about $427 million in the first nine months of 2011.
Over the past several months things have gone from bad to worse for the company. In February, the FCC indicated it would pull the company's conditional spectrum waiver. It lost its high-profile CEO Sanjiv Ahuja, the former head of European wireless operator Orange. And its biggest partner, Sprint Nextel, abandoned its network-sharing deal with the company.
The company has vowed to fight on, even if that means taking the FCC to court to win approval for its network. But it looks like more than ever, LightSquared is hanging on by only a thread of hope.
Though it hasn't said so publicly, FCC officials already consider the LightSquared deal dead. And the agency is now focusing on other avenues for achieving its goals of freeing up 500MHz of wireless spectrum by 2020 and encouraging more competition in the market.
Philip Falcone, the billionaire hedge fund manager whose attempt to build a new 4G wireless communications network has been derailed by regulators, confirmed that he may place his LightSquared venture into bankruptcy, but insisted that such a step would not be a precursor to abandoning the ambitious project.
“The rationale behind a voluntary filing [would be] 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,” Mr Falcone said on Thursday.
LightSquared’s prospects were severely dented in February when the US government withdrew support for Mr Falcone’s plans to take on the established mobile phone operators, citing concerns that the proposed network might interfere with GPS satellite navigation and aircraft safety systems.
Since then Mr Falcone has vowed to fight on while acknowledging that a bankruptcy filing was one of several options under consideration. He said however that such a move would not necessarily wipe out the equity in LightSquared because of the underlying value of the radio spectrum that it owns.
Mr Falcone’s Harbinger Capital has already invested almost $3bn in the project but suffered a further serious setback last month when Sprint Nextel, the third-largest US mobile network operator, abandoned a 15-year spectrum hosting deal with LightSquared under which it would have built the LightSquared’ LTE network.
Hedge fund manager and lead investor of the beleaguered wireless startup LightSquared, Phillip Falcone, informs Reuters that LightSquared is “seriously considering” bankruptcy in light of the $427 million loss the company suffered in the first nine months of 2011.
Falcone said a bankruptcy would allow the company time to find a way to deal with communications interference issues that have arisen with the planned buildout of a U.S.-wide wireless broadband network. Bankruptcy would not necessarily wipe out the equity holders of LightSquared because the spectrum it owns retains value.
NEW YORK, April 5, 2012 -- /PRNewswire/ -- Yesterday Phil Falcone said that one of several options he was seriously considering recommending to the LightSquared Board is a voluntary Chapter 11 filing for LightSquared.
Today, he added to that statement: "While no decision has yet been made, the rationale behind a voluntary filing would be to give us the necessary time to continue with our vision, build the network and protect the company from creditors who are more interested in a quick flip."
Surprising, well, nobody -- hedge fund manager and LightSquared's primary backer Philip Falcone says they're considering bankruptcy proceedings for LightSquared after the FCC (and potential interference with GPS technology) plunged a dagger into the heart of the project. Falcone told Reuters this week he's "seriously considering" filing a voluntary bankruptcy for LightSquared, which reported a $427 million net loss during the first nine months of 2011. With dwindling cash, no necessary FCC waiver, and no product -- there's not many options to consider. Falcone insists that bankruptcy would give the company time to manage GPS interference issues at least one report claimed couldn't really be corrected.
Wall Street guru Philip Falcone placed a $14 billion bet on what he thought was a sure thing. Two years ago, his company had the blessing of the Federal Communications Commission to use satellites to bring cellular service to the farthest reaches of the country, a high priority for President Obama.
Today, the FCC has put the project on ice, all but killing it. And Falcone, acknowledging for the first time that his business is near bankruptcy, on Thursday pointed an angry finger at Washington.
In a scathing critique of inside-the-Beltway politics, Falcone in an interview accused the FCC of bowing to special interests that could have been hurt by the innovation, robbing consumers of a cheaper alternative to AT&T and Verizon Wireless.
Falcone and other business groups see the fall of Reston-based LightSquared as a cautionary tale of what can happen when a business bets on Washington.
“We were ready to put the shovel in the ground, but they pulled the rug out from under us,” Falcone said. Lobbyists, he added, “have a tremendous amount of power, and I was shocked by how regulators responded to that pressure.”
LightSquared founder Phillip Falcone said he may consider voluntary bankruptcy for his troubled wireless broadband venture, Bloomberg reported on Wednesday. “There are arguments that we would be better off in bankruptcy than not,” Falcone said. “LightSquared, if I have to, I’ll put it into bankruptcy. I don’t care,” adding that he would maintain control of the company if it were to file. LightSquared planned to build a high-speed data network that would cover as many as 260 million users, however it failed to gain approval from federal regulators. The FCC blocked LightSquared’s LTE network in February due to concerns surrounding interference with GPS systems. Through his hedge fund Harbinger Capital Partners, Falcone has invested roughly $3 billion in the failed venture. Bankruptcy is “not what I want, not what I desire, I’d rather find a different way out,” he said.
New York Post, Phil: No ‘quick flip’, Falcone, Icahn spar over LightSquared, By KAJA WHITEHOUSE, Last Updated: 12:16 AM, April 6, 2012, Posted: 11:39 PM, April 5, 2012
A looming battle of the billionaires heated up yesterday after hedge-fund honcho Phil Falcone said he wanted to protect his troubled wireless venture LightSquared from creditors who are merely out for a “quick flip.”
The diss appeared to be directed at a group of creditors, led by billionaire Carl Icahn, who have been mulling a debt-for-equity swap that could wrest control from Falcone, LightSquared’s biggest backer.
Icahn and other holders of a $1.6 billion bond have until the end of this month to decide whether to declare LightSquared in default. The showdown follows a decision by federal regulators to pull the plug on the service because of GPS interference issues.
Yesterday, creditors held a conference call to discuss the situation, sources told The Post.
To fend them off, Falcone said he is considering a voluntary prepackaged bankruptcy for LightSquared, saying it will allow him to protect his $2.9 billion investment and the company “from creditors who are more interested in a quick flip.”
NEW YORK (CNNMoney) -- The end appears near for LightSquared, one of the wireless industry's grandest and riskiest gambles.
It's odd to think of a company backed by $5 billion as a startup, but that's what LightSquared is. It wanted to become the country's fifth nationwide wireless carrier by going toe-to-toe with giants like Verizon and AT&T -- an ambitious vision it had a real shot at pulling off.
Now, after a series of potentially fatal regulatory setbacks, it's mulling bankruptcy. Philip Falcone, head of LightSquared's majority owner Harbinger Capital Partners, told Reuters the company is "seriously considering" the option.
In a subsequent email to CNN, Falcone said: "I've said it is and always has been one of our options."
Chapter 11 wouldn't necessarily spell the end, but it would move the goal posts much farther away. That's a disaster for a company already backed up in its own end zone.
Harbinger Capital Partners CEO Phil Falcone said he's considering seeking bankruptcy protection for LightSquared. "While no decision has yet been made, the rationale behind a voluntary filing would be to give us the necessary time to continue with our vision, build the network and protect the company from creditors who are more interested in a quick flip," he said in a written statement Thursday. LightSquared awaits the FCC decision around whether its ancillary terrestrial component authority is to be revoked (CD April 2 p18). Moving toward bankruptcy is unlikely to change how the commission will rule on the proposal, said Tim Farrar, president of TMF Associates.
Hedge fund manager Phil Falcone said he is considering filing for bankruptcy protection for his Reston-based wireless venture LightSquared Inc., The Wall Street Journal reported.
Falcone said LightSquared had sufficient cash to carry it through the year, and he has no timing in mind for a possible bankruptcy. He also said bankruptcy is the "best way" for him to maintain control of the company.
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