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Judge says she will approve LightSquared bankruptcy loan
|18 июля 2012
A judge Tuesday said she plans to approve LightSquared's access to a $51.4 million bankruptcy loan from a group of the wireless-satellite company's lenders that will keep the company running through November 2013.Judge Shelley C. Chapman of U.S. Bankruptcy Court in Manhattan's approval of the debtor-in-possession financing would immediately release $30.6 million to LightSquared, although the company set a strict timetable as to how it plans to use the money.
Last month, the company said the loan would be only $30 million in total, but now it said other cash it previously thought it could access was "not as easily available" as originally thought. Judge Chapman said she would review the changes to the financing and most likely sign off on it by the end of the day.
Tweed, Hadley & McCloy LLP's Matthew S. Barr, a LightSquared lawyer, said
$23 million of the loan must be used to make payments on the company's lease of
wireless spectrum. The rest will be used to build out its wireless network, pay
professional fees associated with its bankruptcy and for "general
The next $10.8 million of the loan is earmarked for use starting early next year, Mr. Barr said, with a final $10 million available to the company only at the lenders' discretion.
LightSquared has been bleeding cash since it filed for bankruptcy protection in May. Including professional fees related to the Chapter 11 proceeding, the company has lost $81.7 million from the start of its case until the end of June, according to a Friday filing. More than half of that is related to interest expenses.
The group providing the loan, represented by a unit of U.S. Bancorp, is owed $320 million in loans that are secured by the company's leases on some wireless spectrum and equity interest in that spectrum.
A separate group of creditors, which before LightSquared's bankruptcy lent the company $1.7 billion in money secured by all the company's assets, last month granted access to $190 million in cash collateral secured by those loans.
LightSquared has said it will still need to access the $190 million in cash to continue operating.
Judge Chapman Tuesday also approved LightSquared's use of a special team of attorneys to work on matters involving the Federal Communications Commission. Earlier this year, the FCC blocked the company from using a 4G wireless network in a blow that ultimately helped force the bankruptcy filing.
Latham & Watkins LLP will represent the company in its pursuit of FCC approval to use wireless spectrum.
Despite the fact that Latham had already been approved as an "ordinary-course" professional firm in the case, the FCC duties will likely push Latham's fees above the $500,000 cap set for each firm during the Chapter 11 case, LightSquared said.
Latham & Watkins's duties would include representing LightSquared in its fight over the FCC's suspension of its network use, as well as in rule-making proceedings in which the FCC is contemplating opening up more wireless spectrum for companies such as LightSquared.
In February, the National Telecommunications and Information Administration said LightSquared's network could interfere with global-positioning systems, causing the FCC to revoke LightSquared's license to use the wireless spectrum.
The decision marked the latest setback in LightSquared's goal of building a wireless network that could provide cellphone service to 260 million Americans by 2015, and the debt-laden company filed for Chapter 11 bankruptcy in May.
LightSquared's equity is controlled by Phil Falcone and his Harbinger Capital Partners hedge-fund firm, both of which are being sued by the Securities and Exchange Commission for a bevy of violations, including misappropriation of client money, manipulating bond prices and favoritism of certain clients. Mr. Falcone has said he is innocent and will fight the charges.
Источник: Total Telecom