A group of LightSquared’s lenders is seeking court approval to put Dish Network Corp. chairman Charlie Ergen’s $2.2 billion bid for the company’s spectrum assets to the test at a December auction.
The lender group on Wednesday filed papers outlining their auction proposal, which would form the “backbone” of the rival restructuring plan they filed for LightSquared last month — a plan LightSquared’s current owner has already taken steps to fight.
Slated to lead off the bidding at the lenders’ requested Dec. 4 auction date is Ergen, who, through a Dish subsidiary, is offering $2.2 billion in cash for LightSquared’s spectrum assets. The lenders say the bid’s value could rise as high as $3.5 billion with the proposed buyer’s assumption of $1.3 billion in liabilities.
The lender group, owed roughly $1.4 billion, is proposing to pay Ergen a $66.6 million breakup fee if his bid loses at the auction.
The U.S. Bankruptcy Court in Manhattan will consider the lenders’ auction proposal at a Sept. 24 hearing.
Members of the lender group include Cyrus Capital Partners and UBS AG. An investment entity controlled by Ergen, SP Special Opportunities LLP, is also a member, thanks to the more than $800 million in LightSquared debt it has purchased. However, the lender group is blocking that entity from participating in “any decisions” related to the auction to avoid conflicts of interest.
LightSquared’s current owner, Harbinger Capital Partners, sued Ergen in bankruptcy court over SP Special Opportunities’ debt purchases, accusing him of secretly buying up the debt in order to wrest away control of LightSquared.
