Dish decides to pull the LightSquared deal

Posted Jan 10, 2014

Dish Network Corporation, the satellite TV conglomerate, has decided not to pursue the acquisition of LightSquared. Dish Network withdrew the $2.2 billion to buy the bankrupt wireless broadband company. Dish Network chairman Charles Ergen started a trial today regarding whether he had unlawfully bought LightSquared’s debt in order to take over the company.

Dish Network’s executives and shareholders believed that the acquisition of LightSquared would help expand the company’s capacity in the mobile video and Internet services market. Some of LightSquared’s credits supported Dish’s bid, but LightSquared and their controlling shareholder Harbinger Capital Partners opposed the deal. Harbinger wants LightSquared to go through a $4 billion restructuring with Fortress Investment Group as a partner.

Ergen’s trial is taking place at the U.S. Bankruptcy Court in Manhattan. Harbinger and LightSquared alleges that Ergen used a separate entity to buy LightSquared’s debt and hid the identity of the buyer. However, there is a credit agreement that banned this type of purchase from a competitor. Harbinger and LightSquared said that the entity delayed the closing of certain trades to hinder LightSquared’s efforts to negotiate a consensus restructuring with creditors.

LightSquared’s lawyer believes that the decision for Dish to pull the deal may be an attempt to force LightSquared to liquidate or accept a lower offer.

LightSquared went bankrupt in May 2012 after the FCC blocked the company’s plans to build a wireless network. The FCC said that this would interfere with GPS networks. Harbinger believes that they could help regain regulatory control and salvage the wireless plan, according to Reuters. Dish, on the other hand, has billions of dollars worth of spectrum, but has been unable to find a way to put this spectrum to use.

This case has been filed under In re: LightSquared Inc, U.S. Bankruptcy Court, Southern District of New York, No. 12-12080.