NEW YORK — Dish Network Corp. chairman Charlie Ergen would receive a controlling stake in troubled wireless company LightSquared under the company’s newest restructuring plan, announced in court Monday.
The deal, reached Friday as a result of mediation with U.S. Bankruptcy Judge Robert Drain, would give Ergen 60 percent of the new equity in the restructured LightSquared plus $1 billion in new junior debt. JPMorgan Chase & Co., one of LightSquared’s lenders, would receive a total of 31.9 percent of the equity in exchange for $189 million in funding. Other lenders would receive a small piece of equity and warrants to purchase common stock.
The plan has the support of all LightSquared parties except that of Harbinger Capital Partners’ Philip Falcone. In a statement read during the hearing, Judge Drain said that while a fully consensual plan was the goal of mediation, “I have concluded at this time such a result cannot be achieved.”
To satisfy Harbinger’s claims, $189 million is being set aside in an escrow account, funded by JPMorgan, until those claims are settled. Falcone is entitled to no other compensation under the plan.
Harbinger has held a controlling stake in LightSquared but lost a major battle earlier this year to push through a plan that would have allowed the investment firm to retain a piece of the company and settle Ergen’s claim with cash and an unsecured note.
The proposal still faces hurdles — mainly the approval of U.S. Bankruptcy Judge Shelley Chapman. Previous proposals, including one reached through mediation with Judge Drain, have failed or have fallen apart. Dow Jones Newswires
