DISH Ponders Pulling Out of Controversial LightSquared LTE Bid
January 9, 2014 5:14 PM
comment(s) - last by
LightSquared claims DISH CEO fraudulently purchases $1B USD in debt to drive a sale at a lower price
LightSquared's long and sordid history of
government bribes (...er campaign donations)
allegations of fraud
has grown uglier yet again.
I. LightSquared, Creditors Battle in Bankruptcy Court
Most company's don't have a satellite in orbit. Fewer still have a mega-satellite in orbit. And quite possibly only LightSquared launched such a huge and expensive satellite without committing to even elementary engineering due diligence.
Now with its satellite floating useless due to inteference issues and founder Phillip Falcone
facing fraud charges
from U.S. federal securities regulators
a potential spectrum deal with DISH Network
) is on the verge of full collapse. The plan could scuttle LightSquared's hopes of resurrecting itself out of
the bankruptcy it entered into last May
LightSquared is giving up a two-thirds of its spectrum to try to convince regulators to let it use the final third. [Image Source: LightSquared]
The LightSquared bid boondoggle is complicated situtation.
Almost from the start LightSquared -- including its original finance firm, Phillip Falcone's Harbringer Capital Partners -- opposed the deal. They felt the $2.2B USD bid undervalued the spectrum and they were also unhappy with the idea of breaking off smaller chunks of spectrum to sell to U.S. Bancorp (
) and Mast Capital Management LLC -- two lesser bidders. LightSquared felt a troubled assets investment worth $4B USD, led by Fortress Investment Group LLC (
) would be a better path out of bankruptcy.
Confusingly, though it was
LightSquared that enabled the bid
by proposing a spectrum padding scheme to the
Federal Communications Commission
solve the interference issues.
While it was unclear how the FIG-backed LightSquared would use the spectrum, from a technical perspective the plan would be
similar to AT&T
, Inc.'s (
) strategy for solving an interference-plaguged block of spectrum of its own, adding several megahertz worth of unused spectrum space on either side of the block. The LightSquared plan would cut the company's 15 MHz block of spectrum down to just 5 MHz, leaving the 10 MHz that were causing the GPS inteference unused. Losing two-thirds of the company's spectrum would be a blow, but even 5 MHz of spectrum in useful LTE-compatible bands is worth a lot these days.
But creditors had little faith in the FIG investment and pushed forward in U.S. Bankruptcy Court in Manhattan to accept the rival bid from DISH. DISH seemed to be fans of that plan, that would repay creditors $1.8B USD, as well as leave LightSquared with several hundred million dollars to restructure and regear its business.
Creditors were keen on the deal as it would allow LightSquared to pay back the $1.8B USD it owed them; plus it would leave several hundred million for LightSquared to pursue new projects and ventures. Creditors have implied that they may sue DISH if it pulls out, according to
The Wall Street Journal
II. Whose Side is DISH On?
DISH was allied with the creditors while it was pursuing a bid, but now it seems to be rethinking that plan, offering little insight yet into why it's pulling out.
One possible reason why DISH may be pulling out comes from yet another confusing twist. DISH CEO and founder Charlie Ergen reportedly purchased $1B USD of LightSquared's debt, according to a complaint filed by LightSquared. LightSquared claims Charlie Ergen did this in an effort to lock down the spectrum and buy it at a cheaper cost by playing the deal from both sides. LightSquared has called the debt purcahse fraudulent and is trying to get the bankruptcy judge to declare that purchase invalid.
LightSquared has accused DISH CEO Charlie Ergen of fraudulently purchasing its debt.
[Image Source: AllThingsD]
A DISH spokesperson called this filing "a desperate measure." Yet, something has DISH spooked enough that it's reportedly considering dropping its bid anyways.
The Wall Street Journal
DISH is expected to disclose its letter of termination of the bid as soon as Thursday morning, one of the people said.
Rachel Strickland, a lawyer for DISH and its chairman, Charlie Ergen, said in court Tuesday she doesn't think DISH breached the contract. On Tuesday, the parties said in court DISH hadn't formally terminated the agreement to buy LightSquared's assets.
In other words the deal isn't totally dead yet, but it sounds like DISH is positioning itself for a pullout. This latest twist emerged in the courtroom as Judge Shelley C. Chapman carried out initial hearings about the creditors' plan to emerge from bankruptcy backed by the DISH bid.
Philip Falcone, one a venture capital wizard, lost nearly half his fortune and is facing fraud charges over the LightSquared mess.
[Image Source: Jacob Kepler/Bloomberg/Getty Images]
One pressing question if DISH does pull out is why it chose to do so. Perhaps the pullout comes simply due to the On the other hand, if LightSquared is still struggling with intereference issues it had claimed its plan would solve, that would likely impact the FIG investment proposal as well.
The Wall Street Journal
This article is over a month old, voting and posting comments is disabled
ohh my God
1/9/2014 10:28:48 PM
RE: ohh my God
1/11/2014 6:56:24 AM
LightSquared did "political due diligence"....that trumps engineering every time. This is one case that is so delicious because ObamaCorp was unable to deliver the goods.
"It looks like the iPhone 4 might be their Vista, and I'm okay with that." -- Microsoft COO Kevin Turner
Report: DISH CEO Makes Aggressive $2B USD Bid for LightSquared's Spectrum
May 20, 2013, 10:25 PM
LightSquared Offers Plan to Squash Satellite 4G Interference Concerns
October 1, 2012, 10:41 AM
FCC Considers AT&T LTE Spectrum Conversion, Sirius Interference Solved
September 27, 2012, 1:33 PM
The Debacle Continues: LightSquared CEO Charged With Fraud
June 28, 2012, 11:26 AM
Game Over: LightSquared Goes Bankrupt
May 14, 2012, 7:44 PM
AT&T Defeats Purpose of New Apple SIM, Locks iPad Air 2 SIMs to Its Network
October 24, 2014, 2:17 PM
Get Ready for "Microsoft Lumia" Smartphones in Next Few Months
October 24, 2014, 12:26 PM
Report: Samsung Galaxy S5 to Receive Android 5.0 Lollipop in December
October 24, 2014, 11:26 AM
Dreadful Fire Phone Sales Lead to $170M Writedown for Amazon
October 24, 2014, 8:55 AM
Xiaomi Moves Data Out of China to Woo EU, America, Escape Security Concerns
October 23, 2014, 5:11 PM
Android Wear’s First Major Update Brings GPS, Offline Music Support
October 23, 2014, 1:34 PM
Most Popular Articles
Chinese Government Declares Digital War Against America's Top Tech Firms
October 20, 2014, 12:07 PM
Report: 2015 Ford Focus Electric MSRP Slashed by $6,000, Will Retail for $29,995
October 18, 2014, 6:23 PM
Apple Releases iOS 8.1; Adds Apple Pay Support, SMS Relay, Instant Hotspot
October 20, 2014, 1:00 PM
Windows 8.1 + Android "Sell Mini PC" w/ Bay Trail Creates New PC Form Factor
October 20, 2014, 5:07 PM
Update: Motorola Droid Turbo Coming Oct 28, 48-hour Battery Life Confirmed
October 19, 2014, 9:19 PM
Latest Blog Posts
The Surface Mini That Was Never Released Gets "Hands On" Treatment
Sep 26, 2014, 8:22 AM
ISIS Imposes Ban on Teaching Evolution in Iraq
Sep 17, 2014, 5:22 PM
Space Terrorism is a Looming Threat For the United States
Apr 23, 2014, 7:47 PM
Facebook Aims to Provide Internet to "Every Person in the World" with Drones, Satellites
Apr 1, 2014, 10:20 AM
Retail Mobile Sites Experience Outages in Light of Simplexity's Bankruptcy
Mar 14, 2014, 8:48 AM
More Blog Posts
Copyright 2014 DailyTech LLC. -
Terms, Conditions & Privacy Information