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Investor Icahn said snapping up $300m of LightSquare debt

updated 05:15 pm EST, Fri January 20, 2012

Could pressure LTE provider to sell off assets

Veteran corporate raider/investor Carl Icahn may have grabbed some of LightSquared's debt. Reuters, citing several sources familiar with the matter, reports that Icahn, along with two others, bought up a total of $300 million of the troubled LTE network provider's loan obligations over the course of 2011. Icahn has declined to comment.

Last year, LightSquared lost almost one-half billion dollars. Its financials suggest that without new investment, the company, which is building out its LTE 4G network, could run out of cash and face foreclosure. That could impact significantly a large number of smaller fledgling carriers planning to use the network, as well as Sprint, which has a multi-billion dollar deal pending to manage portions of LightSquared's backbone.

LightSquared's problems have only gotten worse in the past month. The company needs FCC approval in order to proceed with the network, and the government agency has expressed concern that the wireless carrier's transmissions might be creating interference with GPS receivers. In mid-December, the US Department of Defense and Department of Transportation issued a joint statement echoing the concern that the 4G signals demonstrated "harmful interference to the majority of other tested general purpose GPS receivers." LightSquared responded, claiming that US government agencies were biased and had colluded to make sure the company's deployment of its LTE network would not go forward.

LightSquared's $9 billion arrangement with Sprint is also in jeopardy. As part of the deal, LightSquared had committed to get FCC approval by the end of last year. That deadline has past, but Sprint has given LightSquared an extension until the end of this month to get the FCC's go ahead.

Icahn bought up the debt with two other investors, hedge fund Appaloosa Management and Beal Bank. It is unclear what will happen next. LightSquared has assets valued at $4.64 billion. It holds licenses to operate in various broadcast spectrums currently worth about $2.44 billion. It is possible that Icahn might demand that these licenses be cut away from LightSquared and sold off.

by MacNN Staff



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