Phil filleted…

Posted in DISH, Financials, LightSquared, Operators, Regulatory, Spectrum at 9:34 am by timfarrar

Tomorrow’s hearing in the LightSquared bankruptcy case was supposed to be the showdown at which the judge would decide between LightSquared’s own proposed bidding procedures (which attempt to reject Ergen’s $2.2B bid for the company) and the alternative bidding procedures which have now been proposed jointly by the LP and Inc secured creditors (and would accept Ergen’s stalking horse bid). However, LightSquared has appointed an independent committee of its directors (including a new member, Donna Alderman, who fought with DISH over the resolution to the DBSD case) and this committee (whose independence is disputed by the LP creditors) has requested that the hearing be delayed until September 30.

Of course, no-one is taking seriously the alternative plan proposed by Harbinger, which would simply keep the existing debt in place (converting it to PIK interest) and allow Harbinger to stay in charge, but LightSquared’s plan would allow it to deem a non-cash bid, contingent on FCC approval, superior to DISH’s cash bid, which could potentially further delay a resolution of the case. In contrast, under the secured creditors plan, any competing bid must be non-conditional on FCC approval, making it hard to see how any strategic buyer could emerge – although since potential bidders have already had two months to make an offer, and none have done so, it is likely that no-one else other than Ergen is actually interested.

LightSquared spent last week groveling to the FCC, suggesting that “The current stalking horse bid might be the only one submitted, if the FCC does not make its decisions quickly, because the company‚Äôs assets cannot be fully valued until the Commission acts on the pending modification applications.” However, the FCC’s recent grand bargain with DISH and AT&T over the 700MHz A and E blocks, AWS-4 downlinks, and the PCS H block auction makes it pretty clear that the FCC would prefer DISH as a buyer of the LightSquared assets, so that just the L-band uplinks would be used, rather than Harbinger getting a spectrum “swap” (which in reality would represent another windfall and lead to more criticism in Congress).

Given Phil’s troubles with the SEC, its hardly surprising that Chairman Mignon Clyburn would now choose DISH over Harbinger. That’s in contrast to my post last year asking if Phil was finally right about something with his comment that “Everyone knows Ergen is not going to build out a network. No one trusts him, including the FCC. They are not going to put their eggs in that basket because they know he will make them look foolish” (which prompted this response).

Harbinger’s attempt last month to sue the GPS industry for $1.9B also appears to have backfired, with LightSquared creditors pointing out that Harbinger was violating the bankruptcy exclusivity order by asserting claims of the estate. Moreover, this action, coming immediately after the FCC put LightSquared’s request for uplink approval on public notice, appeared likely to delay rather than expedite any regulatory approval from the FCC. Not only has Phil therefore caused further angst in the bankruptcy case, but I’m told that he is also struggling to find a credible plaintiffs firm to take the lawsuit forward, while the GPS industry have hired Boies Schiller to fight their side of the case. So perhaps now is the time to ask if Phil can get anything right?

Leave a Comment

You must be logged in to post a comment.