LightSquared looks to sell assets, continue FCC discussions under plan

By Caroline Salls

Pittsburgh, Aug. 30 - LightSquared, Inc. filed a plan of reorganization and related disclosure statement on Friday with the U.S. Bankruptcy Court for the Southern District of New York.

"LightSquared has always believed, continues to believe, and operates on the premise that concluding discussions with the [Federal Communications Commission] and interested government agencies regarding the terrestrial deployment of its wireless spectrum significantly increases the value of its estates and most likely leads to a value-maximizing solution, whether through a sale process or an alternative transaction," the disclosure statement said.

As a result, the company said it believes it is necessary to protect its estates and the current value of its assets through the filing of a plan that calls for a sale of those assets.

According to the disclosure statement, other proposed plans, which include one filed last month by an informal group of LightSquared LP lenders, call for "the parallel, but not combined, sale" of pre-bankruptcy collateral.

The company said it believes that sale might not dispose of all of the assets of the estates and may likely depress, rather than maximize, the value realizable for the benefit of all stakeholders.

LightSquared said it is in the process of forming a special board committee to oversee its sale process.

Creditor treatment

Treatment of creditors under LightSquared's plan will include the following:

• Priority claims will be paid in full in cash;

• Holders of other secured claims will either be paid in full in cash or receive the collateral securing their claims;

• Holders of pre-bankruptcy non-subordinated facility claims will receive a share of plan consideration remaining after priority claims are paid in full;

• Holders of pre-bankruptcy subordinated claims will receive a share of plan consideration remaining after priority and non-subordinated facility claims are paid in full;

• Holders of general unsecured claims will receive a share of plan consideration remaining after priority and facility claims are paid in full;

• Holders of existing preferred units will receive a share of plan consideration remaining after all other claims are paid in full;

• Holders of common interests will receive a share of plan consideration remaining after all other claims and preferred interests are paid; and

• Intercompany interests will be reinstated.

Plan comparison

In comparison, treatment of creditors under the LP lender group's plan, is slated to include the following:

• Administrative claims, priority tax claims and priority non-tax claims will be paid in full in cash;

• Holders of LP facility secured claims will receive a share of plan consideration after payment of priority and general LP unsecured claims, provided that, if the stalking horse bidder under the lenders' proposed $2.2 billion sale is the high bidder and the effective date occurs, the plan consideration distributed to the holders of LP facility secured claims will equal $2,102,000,000 in total;

• Holders of other LP secured claims will either be paid in full in cash or receive other treatment that renders the claims unimpaired;

• Holders of general LP unsecured claims will receive a share of an unsecured plan distribution. To the extent these claims exceed the unsecured claims distribution, these creditors will also receive any plan consideration remaining after payment of secured claims;

• Holders of LP preferred unit interests will receive a share of any plan consideration remaining after payment in full of unsecured claims, including the excess unsecured claim distribution; and

• Holders of LP common equity interests will receive a share of any plan consideration remaining after payment of preferred unit interests.

LightSquared is a Reston, Va.-based wholesale-only 4G-LTE network integrated with satellite coverage. The company filed for bankruptcy on May 14, 2012 under Chapter 11 case number 12-12080.

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